Economy

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The Scottish Government's new capacity to borrow is a vital, if little-discussed, power. However, says Angus Armstrong, the details of how this will work may have been dodged by the Smith Commission but cannot long be avoided by the Scottish Government and HM Treasury. 
 
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What’s the fuss about austerity?
 
Is all the concern about austerity misplaced? The latest labour-market statistics published on Wednesday contained more good news. There was another increase in the employment rate, in both Scotland and the UK. Scotland’s 74.4% employment rate is at an all time high. The economic inactivity rate has fallen and is at a historic low.
 
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Income inequality in Scotland (and the UK) was low and stable throughout the 1960s and 1970s. The 1980s saw a significant increase in inequality, driven by a variety of factors. Deindustrialisation and technological change caused a fall in demand for many middle and lower-skilled occupations, and this combined with an erosion of trade union power and labour market deregulation led to a relative decline in wages at the lower end of the distribution. Financial deregulation and a reduction in top rates of income tax contributed to a rise in salaries at the upper end.
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Current discussions over the Scotland Bill have seen the Chancellor and SNP Westminster leader Angus Robertson at loggerheads over the role of borrowing in national life. Gemma Tetlow of the Institute for Fiscal Studies discusses the approach of the two governments and their likely implications for taxation. 

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Talk of Scotland adopting a Scandinavian economic model usually comes with no mention of the bill but, suggests recent research, the impact of higher taxes is more complicated than it might at first appear. 
 
The Scottish Government holds up the Scandinavian economic model as one this country might emulate.
 
The focus is typically on the good news of more and better public services, with little comment on higher levels of taxation to pay for them.
 
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The suggestion by the SNP that success at the Westminster election provides a mandate for devolution of the National Minimum Wage may create some unexpected complications, says David Eiser.
 
The SNP believes that the scale of its victory at the General Election amounts to a mandate for the devolution of further powers (beyond those recommended by the Smith process) to the Scottish Parliament. In particular, they have called for devolution of powers over the minimum wage, both in their election manifesto and in subsequent announcements.
 
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David Comerford discusses the latest IFS analysis of Scottish Government finances under so-called full fiscal autonomy. How did the SNP respond to these figures?

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Latest blogs

  • 18th May 2018

    Different political actors have responded to the decision by the Scottish Parliament to withhold its consent for the UK Government’s showpiece EU (Withdrawal) Bill in very different ways. Prof Nicola McEwen sifts the facts from the hyperbole and explains where we are and where we go from here.

  • 15th May 2018

    On 8 May the UK’s House of Lords passed an amendment to require the House of Commons to vote on remaining in the European Economic Area (EEA), the possibility of Britain adopting the so-called ‘Norway model’ is back on the agenda of British politics. Here the authors of Squaring the Circle on Brexit: Could the Norway Model Work?, John Erik Fossum and Hans Petter Graver, give some background to Norway’s relationship with the European Union and reveal the truth behind some common myths about the Norway model.

  • 4th May 2018

    The Sewel Convention has historically worked well, says Michael Keating, but Brexit will put it to the test.

  • 3rd May 2018

    Amendments to controversial Clause 11 of the European Union (Withdrawal) Bill were agreed in the House of Lords yesterday evening, following a deal between the UK and Welsh governments last week. Jack Sheldon and Mike Kenny explain the significance of this agreement for the UK as a whole and outline a number of unresolved issues it raises.

  • 2nd May 2018

    The hesitant progress of Brexit legislation through Westminster has provided parliament with an opportunity to show its teeth and, says Tobias Lock, it demonstrates that the legislature has bite as well as bark.

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