N-56, named after Scotland’s latitude, predicts an 86% rise in Scotland’s gross domestic product over the next 25 years were a full range of tax-and-spend powers to be used to drive a sustained growth strategy.
Its report, Fiscal Autonomy: an opportunity, not a threat, takes issue with a recent paper from the Institute of Fiscal Studies – contested by the Scottish National Party – which suggested that Scotland would be facing a deficit £7.6bn bigger than its current share of the UK deficit were it to have full responsibility for fiscal policy.
N-56, by contrast, says that extra tax revenues and reduced demand for public services generated by accelerated growth could benefit Scotland’s public finances to the tune of some £52bn a year.
Dan Macdonald, the businessman who founded N-56, said: ‘Reports from the IFS which have been used as a critique of fiscal autonomy should in fact be viewed as a damning indictment of the current economic model, and if the model isn't working it clearly needs fixing.’
He argued that linking control of fiscal policy to a bespoke Scottish economic growth strategy, powered by more effective collaboration between the public and private sectors, could raise Scottish output from the 2012 figure of £153bn to £282bn over 25 years.
The report, compiled by the consultancy BiGGAR Economics, says: ‘The main issue with the IFS analysis is the assumption that fiscal autonomy would not result in Scotland improving its economic growth trajectory relative to the UK as a whole.
‘There is considerable scope and opportunity to increase growth in the Scottish economy, with an economic strategy that is based on Scottish needs and opportunities and this would make a significant difference to public finances.’
It claims: ‘The management of the Scottish economy by the UK Government, which retains many reserved powers that are important to a strategy for economic growth, has failed to deliver public finances in Scotland to provide the infrastructure and other conditions for economic growth and to provide public services that meet public expectations.’
Fiscal autonomy, which the SNP wants to phase in gradually, ‘would mean that most of the policy tools relevant to economic growth would have been devolved to the Scottish Government and so a collaborative approach could be easier in practice’, the report adds.
Graeme Blackett of BiGGAR said that the growth Scotland could achieve under full fiscal autonomy would also benefit the UK as a whole by rebalancing the UK economy.
