I’m sure that it has never bothered Ed that the two of us disagree on so much. I didn’t like the cut of his jib when he was in the Westminster shadow of Irn Broon. That dislike went steeply downhill from there when he brought his fiscal sleights of hand, so assiduously learned from his master while at HM Treasury, into Labour’s front bench. I thought ‘achievements’ like the windfall tax were deceitful, especially given the plight of pensions since.
So, when the other shoe dropped on the UK’s rating in financial circles from the hallowed Aaa to Aa1 in Moody’s eyes, I had expected to be equally appalled by Balls’ response to this as I am by Osbo dropping the ball in first place, especially as the 2010 Conservative Party General Election Manifesto made safeguarding Britain’s credit rating “the number 1 Benchmark for Britain”.
But Ed’s press release is measured…and spot on.
“It would be a big mistake to get carried away with what Moody’s or any other credit rating agency says. Tonight’s verdict does not change the fact that the credit rating agencies have made major misjudgements over recent years, not least in giving top ratings to US sub-prime mortgages before the global financial crash.
“But what matters is the economic reality that the credit rating agencies are responding to. Moody’s themselves say the main driver of their decision is the weak growth in Britain’s economy. Their judgement is in response to nearly three years of stagnation, a double-dip recession, billions more borrowing as confirmed this week and broken fiscal rules.”
Again I’m sure Ed doesn’t give a rat’s toss what I think but I agree with him that, in the upcoming Budget, the UK government needs to face facts that their approach has failed to kick-start our flatlining economy. Without real growth or massive spending cuts, there will be no mechanism to get the deficit down. And I share Ed’s suspicions that David Cameron and George Osborne will fail to put their political pride aside in the economic interest. Otherwise, the UK faces more long-term damage and pain for businesses and families.
Such unpleasant reality is not easy to deal with. I agree entirely with Ed’s summation: “The issue is no longer whether this Chancellor can admit his mistakes but whether the Prime Minister can now see that, with UK economic policy so badly downgraded in every sense, things have got to change.” Except that there is one positive alternative beckoning for a coherent subset of the 60 million people in what was once the world’s dominant economy but has been brought to this sorry pass who need not thole much more of this economic tragedy, this century-long decline they continue to suffer.
That coherent subset are the Scots. In 20 months they, uniquely, have an opportunity to make a change of their own. And, while I wish our English cousins no harm, they have been in the process of dragging a buoyant and fiscally healthy Scotland with them on the long slide to third-class status in the world. They fail to see that it’s not membership of the Security Council or ability to nuke Teheran into dust that matters in the world.
As Singapore or Switzerland—never mind Scandinavians—will tell you: money makes the world do round and not only buys you friends in global terms but provides you with a decent class of enemy. All those ‘small’ places have clout in the world AND, what is more to the point AAA ratings from Moody’s. Ed omitted to mention that, or the alternative open to Scotland to bale out of this ongoing fiscal balls-up and join them.
What guarantee do Scots have that becoming a normal country will lead to sunlit uplands of prosperity for all? None, But consider five key points on Scotland post-independence:
- Scotland would start with a £60bn per annum oil business, plus a booming renewables sector, world-class reputation in marine engineering, £4bn in whisky exports and a food, drink and tourism business that puts Swiss chocolate to shame.
- Despite alarmist puffery from unionists, the EU would welcome Scotland as a member because we’d be net contributors and can supply the energy that now-anti-nuclear Germany will need as she runs down her nuclear generation. We’d also get to join the Nordic Union, the most affluent and understated force for good in the world.
- Not only would England be unable to stop us keeping the pound but, if sensible, they would co-operate. The present run on the pound (vs $ and €) is just the start. While Scotland, with its relatively larger exports, would benefit from a relative devaluation. England alone would head for a Weimar inflationary nightmare.
- Though Scotland would shoulder the result of UK fiscal mismanagement in the shape of a debt share currently passing £65bn, by using oil revenues and cutting defence from our current £3.4bn share to under £2bn, that could be not just handled but paid off within 30 years. This would transform our present debtor position to one like Norway where we could build a national fund as an insurance policy for the future.
- As a small, prosperous country on the edge of Europe, we would have the advantages currently enjoyed by the Scandinavians, Ireland, Iceland or the Baltics, ALL of whom are doing better financially than the UK. Plus, as a major energy producer and exporter we’d have an Aaa rating like all the Scandinavians. And if we got our banks back to their former canny rectitude, Edinburgh would recover as a financial centre.
But all of that is not given. As with any opportunity, real difference is only achieved by exploring the unknown. And—thanks to Ed for pointing this out—but sometimes you just need Balls to do it.