SCOTLAND must free itself from the “shackles” of the Bank of England and the Treasury if it is to achieve economic growth as a country, an expert has insisted amid news the UK has slipped into recession.
It was confirmed on Thursday the UK went into recession at the end of last year after the Office for National Statistics estimated the gross domestic product (GDP) fell by 0.3%, following a decline of 0.1% in the previous three months.
It means that the economy entered a technical recession, as defined by two or more quarters in a row of falling GDP – the monetary value of the final goods and services produced in a country in a given period.
Growing the economy was one of Prime Minister Rishi Sunak’s five priorities and yet the UK has entered recession for the first time since the first half of 2020.
READ MORE: What does being in recession mean and how does it affect me?
But Professor Richard Murphy has insisted it is no surprise given the PM has “promoted everything that creates a recession”.
He told The National: “Tax cuts can never deliver growth, they just make the rich richer. Austerity cannot deliver growth, it just crushes public services and the pay of those who work for them.
“Interest rate hikes have never delivered growth. They just boost bankers’ bonuses whilst crushing the wellbeing of those households who have mortgages and those who pay rent.
“Pay restraint cannot deliver growth. In fact, it is designed to deliver the exact opposite.
“Sunak promoted everything that created a recession. It is not an accident that we have one.”
Chancellor Jeremy Hunt said inflation and high interest rates were behind the output fall, but insisted the economy was “turning a corner”.
But Murphy (above) believes Scotland remaining part of the UK will only ensure the “current mess” continues.
Hunt is reported to be actively preparing to slash public spending at the next UK Budget.
In order to achieve growth, Murphy insisted the UK needs to invest significantly in climate change infrastructure, social housing, transport and energy, while providing incentives for households to invest in the country’s future by installing heat pumps, for example.
Murphy added businesses need to invest to increase productivity, which they would if households and the Government were spending.
READ MORE: How does a recession affect house prices and mortgage rates?
But he has his doubts that either main Westminster party will deliver these things and, if Scotland wishes to grow, independence is the only answer.
He added: “Rishi Sunak has not hinted that he will do any of these things and Labour has cancelled its £28 billion plan for green growth. Neither of these parties gives a damn about what happens in Scotland.
“If Scotland wants growth to exploit the enormous green energy potential that exists within the country then it could have it.
“That, though, is only possible if it is freed from the shackles of the Bank of England and HM Treasury, which still believes in the policies that delivered the great recession in the 1930s.
“Scotland has a choice. Economic recession need never be a part of its future.”
The fourth quarter contraction was the biggest since the first three months of 2021, at the height of the pandemic.
Most economists were forecasting a 0.1% decline in GDP between October and December.
Across the year as a whole, the economy grew, but by an anaemic 0.1%, down from 4.6% in 2022 and – when stripping out the pandemic-hit plunge seen in 2020 – the weakest growth since the aftermath of the financial crisis in 2009.
William Thomson, founder of pro-independence think tank Scotonomics, argued for recession to be avoided in the long-term, a rethink of the UK’s economic model is required.
He said: "The irony is that the mainstream economic framework championed by Westminster leads to a recession. It doesn't come 'by mistake' but 'by design'.
“Interest rates rise, causing unemployment, in a vain attempt to control inflation. This has inevitably lead to a recession and the pain that involves.
“There is an alternative to reduce inflation without causing a recession but this requires a rethink of the whole dominant economic model.
“It would make much more sense to limit interest rate rises - a cost for businesses and individuals - and push down energy bills to control inflation, that is the real-world economic response.”
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