Scotland has an “urgent need” to access low-cost debt in order to recover from the economic damage caused by the coronavirus crisis, a landmark Scottish Government report has said.
Increased access to capital investment to support the economy and the creation of jobs at an “unprecedented rate” have been called for by the Scottish Government’s independent economic advisory group, led by Benny Higgins.
Call for radical action to save the economy
In his foreword, Mr Higgins, the former CEO of Tesco Bank and an adviser to Nicola Sturgeon on the Scottish National Investment Bank, said the “monumental scale and nature of this economic shock” should be a catalyst to find bold and radical ways of transforming the economy.
Mr Higgins also warned “quality” jobs were needed to combat the “prospect of an inevitable sharp rise in unemployment”.
The 77-page document Towards a Robust, Resilient, Wellbeing Economy for Scotland warns the pandemic will result in high debt levels and a smaller tax base.
The report says Scotland is “almost uniquely placed” to become a carbon capture centre given the existing infrastructure in the North Sea and proposes a series of recommendations to protect the economy.
They include:
- An urgent need to access low-cost debt requires an accelerated review of the Fiscal Framework, and a significant increase in access to capital investment to support an investment-led recovery.
- A Scottish jobs guarantee, in partnership between business and government, should be introduced to address unemployment, with refocused skills strategies and decisive steps to align teaching and learning in universities and colleges to the needs of business.
- Prioritisation of sector plans to deliver a green recovery, where the coincidence of emissions reductions, the development of natural capital and job creation are the strongest critical investment in the country’s digital infrastructure to improve connectivity, reduce inequalities and build the country’s resilience.
- Urgent action to develop a stronger relationship between business and government on the strategy for Scotland’s economic recovery.
On Scotland’s financial arrangements, the document said there “may be scope to allocate some borrowing undertaken by the UK Government for the benefit of all four nations across the UK as the current fiscal framework is reviewed”.
It also said it was “imperative Scotland’s National Investment Bank opens this year as the country’s primary public sector debt and equity investment institution.
It called for more regionally focused economic development and raised the possibility of more Scottish Government intervention in struggling businesses.
It said there should be “dedicated specialist expertise” to manage the “expanding ownership role” of the Scottish Government in the wake of takeovers at Ferguson Marine and Prestwick Airport.
But unlike other countries, the report said there did not need to be, at this stage, a new organisation to manage state intervention. Rates relief should be targeted at businesses that need them. While the Scottish Government, Scottish Enterprise and VisitScotland should promote a “bold prospectus” for foreign investment.
Economy Secretary Fiona Hyslop said Scotland was facing “enormous challenges” and called for business and government to work together for a “green economic recovery”.
Ms Hyslop said: “We wanted the report to be ambitious and far-reaching, and with this strong and comprehensive set of recommendations this has certainly been achieved.”