The quest for GDP and GDP Growth is not sustainable in a finite world. Metrics such as environmental impact, inequality and wellbeing are far more important and only by elevating them above the quest for “growth at all costs” can a truly fair and sustainable Scotland be created.
― Sterlingisation – the fact that an independent Scotland would lack its own currency – is a root cause of many of the flaws of the underlying philosophy adopted by the Growth Commission.
― Sterlingisation demands that an independent Scotland must run prohibitively tight fiscal budgets and must continually “obsess” over the national public deficit.
― This means that Austerity may become an inevitable national policy despite of the Growth Commission’s claims that this is not desired.
― Particular fiscal rules set by the Growth Commission around the growth of public spending and the link between that growth and the growth of GDP may also result in the imposition of Austerity.
― Population growth may result in GDP growth but if the economy simply enlarges rather than changes shape then this will not result in growth in GDP/capita.
― If public spending growth is constrained to less than GDP growth then this may result in public spending per capita decreasing despite a real terms increase in public spending. Reduced public service provision per person is still Austerity even in a growing economy.
― Sectoral balances in the economy demand that if public sector deficits decrease then deficits must increase elsewhere. This may lead to increases in household debt – as experienced by the UK.
― Only by launching its own currency can Scotland take a more nuanced approach to its fiscal policy, balancing public spending against trade flows to ensure that household debt does not increase. This is impossible under Sterlingisation.
― Growth should not be measured as the sole metric of success in an economy. An approach that takes into account environmental carrying capacity, economic inequality and the wellbeing of citizens is more important.
― Though not recommended, the Growth Commission’s fiscal proposals could be implemented if Scotland had its own currency. Alternative proposals, such as many of Common Weal’s proposals for an independent Scotland, cannot be implemented under Sterlingisation.
― Therefore the most democratic and most “future neutral” approach to independence is to launch a currency by day one of independence then allow future governments the ability to manage fiscal policy as per their manifestos.