Winner of the New Statesman SPERI Prize in Political Economy 2016

Friday 13 February 2015

Nicola Sturgeon's UCL speech

A few people have asked what my reaction is to this speech. I normally try and avoid listening to political speeches, because I find it difficult to put my critical faculties to one side in doing so - and on nearly every occasion you have to do so. To give just one example (which applies to many Labour speeches as well as this one), it is odd to criticise the policy of fiscal austerity, and at the same time complain that the government has failed to meet its own 2010 fiscal target. It would be more logical to praise the government for abandoning its 2010 target. But politicians cannot resist criticising a missed target.

But putting that kind of thing to one side, it was of course really refreshing to hear a mainstream UK politician criticising the policy of austerity. In reality what Sturgeon was proposing was still deficit and debt reduction, but just not at the pace currently proposed by Labour. [Postscript - see Resolution Foundation for details.] (As I noted in this post, there is a lot of space between Labour’s plans and the policy of keeping the debt to GDP ratio constant.) Of course this is in practice very similar to the ‘too far, too fast’ approach initially adopted by Labour after 2010. The big difference here is the rhetoric. Whether the current contrast between Labour and the SNP on austerity points to Labour’s conversion to the dark side, their cowardice, or the fact that Sturgeon answers to a Scottish rather than English media I leave to your discretion.

Of course this is the same person who, with Alex Salmond, was only six months ago proposing a policy that would have put the people of Scotland in a far worse fiscal position than they currently are, an argument that has been reinforced so dramatically by the falling oil price. You could say that it is a little hypocritical to argue against UK austerity on the one hand, and be prepared to impose much greater austerity on your own people with the other.

However let me finish on a more positive note. I read a blog post recently that suggested this was an election Labour would be better off losing. The argument was that a Labour government would still be forced to impose austerity, and that it would as a result lose support to UKIP in the North. A Labour government dependent on SNP support would be abandoned by the SNP at the moment of greatest political advantage to the SNP and disadvantage to Labour.

That is possible. However if we assume that the oil price stays low there is no way a rational SNP would want to go for independence again within the next five years. It might be much more to its long term advantage to appear to be representing Scotland in a responsible way as part of a pact with Labour. So what Sturgeon’s speech may represent is a setting out of terms, and on this basis there is plenty of scope for agreement on the fiscal side at least. And if that agreement leads to less immediate austerity, I for one will be happy.  


  1. It might be a good thing for the Tories to lose too - Cameron can barely keep his extreme-euroskeptic backbenchers in line now. If they win, they are likely to have fewer seats, and any potential coalition partners will probably have fewer seats too, giving those backbenchers even more leverage.

    Tory strategists are hoping that this election is a re-run of 1992. They better hope that if that's true that the next parliament isn't a rerun of 1992-7.

  2. The point in your third paragraph seems a bit cheap. The merit of Scottish independence is not primarily an economic question, whilst the merit of austerity is. You can quite easily be for Scottish independence and against austerity.

    1. I agree with your last sentence. But the problem was that the SNP pretended there would be no short term fiscal problem following independence when there clearly was.

    2. SWL, the non oil Scottish economy is not bad and I think, has considerable upside. The big advantage would have been the Scott's having there own currency, which, hopefully they would have allowed to free float.

      All the same arguments could be used for Greece at the moment. The Tourism potential alone in Greece, as in Scotland, would support a new Drachma currency.

      You, dear Simon, as a died in the wool, mainstream "New Keynesian", will have started to realize that you are a large part of the problem, not part of the solution. For instance, the structure of the EMU and the Euro currency is based on the New Keynesian model. Need I say any more?

      The New Keynesian hegemony, some say, "religious cult", is proving to be very difficult to eradicate, your laissez faire neo-liberal polity has gone viral as they say. Similar to the attempts to eliminate the Ebola virus in West Africa.

      But your greatest sin against the little people, is your insistence that sovereign fiat currency issuing governments, have to "borrow" by issuing "debt" securities (called Gilts) or "tax" citizens, before the government can have any money to spend.

    3. Anon,

      I agree that where the objective is stimulus, it is bizarre to borrow stimulus money because the effect of borrowing is “anti-stimulatory”, i.e. deflationary. The best excuse for borrowing I can see is to keep interest rates up, so as to leave room for interest rate adjustments if the latter are a clearly better way of fine tuning than fiscal adjustments. I stand to be corrected, but far as I can see, the lags and reversability involved in interest rate adjustments are not miles superior to fiscal adjustments.

  3. "there is no way a rational SNP "


  4. Gandhi observed that People's Politics Are Their Daily Bread.

    This general election is a Vote or Starve election for millions of people of all adult ages.

    There is a way to escape the starvation and freezing from all so-called big parties
    See how on

  5. "it is odd to criticise the policy of fiscal austerity, and at the same time complain that the government has failed to meet its own 2010 fiscal target."

    I'm afraid that's a bit of a non sequitur mate.

    You can easily say that ideological austerity is a bad idea, and use the fact that it has failed so spectacularly in its own terms as evidence that it's a bad idea. Osborne has borrowed £257 billion more than he claimed he was going to in 2010, if that's not an indicator that he's done his sums wrong, I don't know what would be.

    For clarification I say this neither as a SNP supporter, nor a Labour one.

    1. You can use the fact that he failed to meet his own target as indicating he realised the harm that the policy was doing, but that is not how the point is typically made. Governments are quite capable of inflicting greater austerity if they are determined to do so.

    2. Once again uk macroeconmic policy is personalised as 'Osborne' for some unfathomable reason. The idea that george osborne spends his evenings with a calculator sweating over his fiscal sums is hilarious. By all accounts he spends his evenings sweating for rather different reasons

  6. Labour missed the bus when Osborne changed tack. The initial Labour criticisms of the first Budget in 2010 were totally justified. When the targets were abandoned, Labour should have said so then and welcomed the abandonment of a failed strategy. But they were too confused to do so. One of Labour's great weaknesses as an opposition is that its divisions show up in deciding how to approach the economy. The Blairites want to say the Tories are right about the deficit because this does down Gordon Brown. The Brownites are too worried defending their own record to put together an effective attack.


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