5 June 2014updated 02 Sep 2021 5:20pm

On the economy, the SNP is starting to sound Osborne-esque

Like the Chancellor, the party has a vested interest in convincing voters that the crisis is over. But it isn't.

The SNP has made a concerted effort recently to emphasise the “strength” of Scotland’s economy and the apparent resilience of its post-crash recovery. In the last few weeks alone, I’ve received a series of press releases highlighting how employment in Scotland has reached “record” levels, how Scottish output will soon “surpass its pre-recession peak” and how “business optimism” is steadily returning.

At first, this struck me as an odd strategy for the nationalists to pursue so close to the referendum. Why should Scots vote for independence if even the Yes campaign (or a large part of it, at any rate) thinks Scotland is thriving within the UK?

But it’s actually consistent with the psychology of the party. It’s no coincidence that support for the SNP boomed in the 1970s following the discovery of oil and gas in the North Sea then crashed in the 1980s as the UK entered a severe downturn. There is a relationship (albeit an inexact one) between how confident Scots feel, economically, and their enthusiasm for constitutional change. SNP leaders understand this, which explains why they are so keen to persuade voters that Scotland’s economy is in such good health.

The problem, however, is that Scotland’s economy is not in such good health. It is, in fact, in a pretty bad state.

Take the report published in the Guardian last week suggesting that just 30 per cent of the Scottish economy is domestically owned. If true, this means Scotland is essentially being asset-stripped by foreign capital, as a significant proportion of the wealth generated by Scotland’s key industries – from North Sea oil to whisky and finance – is channelled down south or overseas.

Equally troubling is the STUC’s estimate that as many as 120,000 Scots are currently employed on zero-hours contracts. This reflects the growth of insecure work in Scotland over recent years and confirms Scotland’s status as one of the lowest pay economies in the OECD.

Then there’s the complicated issue of Scotland’s public finances. Scottish spending is not subsidised by English taxes, nor are oil revenues declining as rapidly as some claim, but Scotland’s overall fiscal position is still relatively weak. Even with a geographical share of North Sea oil, Scotland’s 2012/13 net fiscal deficit was a massive 8.3 per cent of GDP, while its national debt remains upward of 60 per cent of GDP, which is substantially higher than that of many other small northern European countries, including Denmark and Norway, the poster-boys of Nordic social democracy.

This is not an attempt to “talk Scotland down”. Scotland’s unemployment rate is lower, by about 0.4 per cent, than the rest of the UK’s, until recently its economy was growing slightly faster and its trade balance is considerably stronger. (As Craig Berry, a research fellow at the Sheffield Political Economy Research Institute, told me in January: “Primary responsibility for the UK’s £30bn balance of payments deficit lies with southern England, whose main contribution to Britain’s export base – financial services trade – is far too dependent on the crisis-hit Eurozone”.)

But the SNP’s insistence that Scotland’s economic prospects are brighter than the evidence suggests is beginning to look Osborne-esque. Like the Chancellor, the SNP has a vested interest in convincing voters that the crisis is over, even if the challenges they face on a day-to-day basis, from finding permanent work and to paying household bills, tell them it definitely isn’t.

The Yes campaign’s narrative is not, of course, exclusively economic. A couple of weeks ago, Yes Scotland rolled out a new poster campaign highlighting levels of child poverty in Scotland, and the SNP itself regularly criticises the coalition’s “heartless” spending cuts and welfare reforms. But these attacks don’t sit easily with the Scottish government’s panglossian account of Scotland‘s economy: either Scotland is being devastated by Tory austerity or it’s heading for another boom – I’m not sure it can be doing both at the same time.

Last year, Alex Salmond told the Observer that independence would be won on the back of a “rising tide of expectations”. The question nationalists have to ask themselves now, with less than four months to go until the vote, is this: how far are people’s expectations likely to rise when their lives are being ruined by a failing and dysfunctional economy?