'Fiscal autonomy will boost investment, jobs and public spending'

By Fiona MacGregor

Two of Scotland's leading economists have said fiscal autonomy will boost the nation's long-term economy by encouraging investment, creating employment, and allowing for more efficient public spending.

In a letter to the Scotsman newspaper, Professor Andrew 
Hughes-Hallett, of George Mason University, and Professor Drew Scott, of the University of Edinburgh, reject a report in that paper that a fiscally autonomous Scotland within a wider sterling area would have no ability to determine its own tax and spending policies. The professors write that claim is "simply wrong".

Instead, they say: "Fiscal autonomy would provide a Scottish Government with the fiscal policy levers it needs in order ­better to encourage investment, create employment and maximise the efficiency of public spending. All of this will contribute to raising the underlying long-term growth potential of the economy..."

The economists stress the need for appropriate and disciplined fiscal policies to bring success, but emphasise that "fiscal autonomy should not be equated with fiscal indiscipline, fiscal impotence or fiscal autarky."

And they say that establishment of an independent Fiscal Policy Commission by the Scottish Government will help ensure the long-run sustainability of Scotland's fiscal policy, as has happened in the EU’s most successful economies (Austria, ­Belgium, Germany, the Netherlands 
and Sweden), where such commissions have already been established.

Profs Hughes-Hallet and Scott conclude that fiscal autonomy for Scotland will: "Provide (the) government with the economic policy levers needed to manage the economy responsibly, this being particularly important during periods of economic turmoil such as we are currently experiencing."