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Budget reassurances needed

Published: 4 Mar 2017 00:01
Part of:
Economy

UK must call a halt to austerity and support economic growth.

The UK Government’s budget must set out measures to protect households from further austerity and the uncertainty of Brexit, Finance Secretary Derek Mackay has said.

In a letter to the Chancellor, Mr Mackay outlined the urgent need for constructive discussions on the single market and immigration, a reversal of the UK Government’s damaging austerity plans and further support for the oil and gas sector.

Fraser of Allander Institute research has found leaving the single market could reduce Scotland’s GDP by around £8 billion per year and mean 80,000 fewer jobs, compared to a scenario where the UK remains in the EU. With around 181,000 EU nationals currently living in Scotland, Mr Mackay also voiced concerns that any move to limit migration could seriously harm Scotland’s economy.

With the UK Government planning for an additional £3.5 billion of spending cuts in 2019-20, at the point when departure from the EU is likely, Mr Mackay said this was the wrong time for more austerity. 

In addition Mr Mackay called for help for the oil and gas industry by improving access to decommissioning tax relief, incentivising exploration, and for them to deliver on their commitment to provide loan guarantees to protect critical infrastructure. He urged the UK Government to follow Scotland’s lead and fund projects that demonstrate they can improve the capacity of Scottish sites for securing decommissioning, dismantling and disposal contracts.

Mr Mackay said:

“Between the confusion and uncertainty created through the UK Government’s approach to Brexit and a welfare reform agenda that has hammered some of the most vulnerable people in society, the Chancellor must this week offer Scottish people some relief in his budget.

“We need to see investment and support for economic growth not more austerity at a time when Brexit poses an unprecedented risk to the UK economy, public finances and consumer confidence.

“A particular issue for both Scotland and the UK is the future of the oil and gas industry. While we are taking action to help the sector, the Chancellor must also step up the plate.

“There must be action to improve decommissioning tax relief, ensuring that the right assets are in the right hands, and delivery of their commitment to provide loan guarantees which is of vital importance to both the supply chain and ensuring critical infrastructure remains operational. 

“With around £17.6 billion expected to be spent in the North Sea over the next decade on decommissioning, the UK should join Scotland in funding projects to help secure work and cut costs in this emerging field.”

Background

Research from the Fraser of Allander Institute on economic impact of leaving single market available.