“Nobody likes a gloomy Scot,” said Humza Yousaf, Scotland’s first minister, as he gave a landmark speech on Tuesday at the London School of Economics (LSE) lambasting UK fiscal policy and the “hunched shoulders” of its flagging economy.
There are reasons to be optimistic, he said. “Look at Ireland.”
The Republic, Yousaf argued, is the model for how a future independent Scotland builds a thriving economy inside the European Union’s single market.
Yet he also suggested that an independent Scotland could be as much of a competitor for the Republic as a potential partner. Yousaf hinted he might favour slashing Scotland’s corporate tax rate for specific industries, such as renewable energy, life sciences and medtech, to spur investment. These sectors are also heavily targeted by Irish policymakers.
Yousaf’s big foray “down the road” to London was highly anticipated in Westminster political circles, where discussion of reversing Brexit is seen as verboten these days among most UK politicians. Scotland’s leader’s office, meanwhile, left nobody in any doubt that Yousaf would go to the LSE with a call to quit Britain, reverse Brexit and rejoin the EU.
Things got off to a frenetic start in advance of his speech. The entrance to the LSE’s Old Building just off Aldwych was surrounded by students protesting against the war in Gaza. Yousaf’s wife is of Palestinian origin and his parents-in-law were trapped for a time in Gaza at the outset of the Israeli bombing campaign.
The protesters weren’t there to target the first minister; they were demonstrating against links between the LSE and Israel. Still, the protest seemed to make the organisers skittish and access to the event was tightly controlled.
The event was held in the LSE’s Old Theatre, where previously invited speakers included Malcolm X and Muhammad Ali. Yousaf’s event was comparatively less glamorous, but nearly as pugilistic as he laid into the alleged failures of Tory stewardship of Britain’s economy over the past 14 years.
Quoting Ed Balls, the former Labour frontbencher-turned-broadcaster, Yousaf asked a simple question: “Why does the UK economy not grow any more.” It has been treading water in a shallow recession since last year, with growth of just 0.8 per cent forecast for the whole of 2024.
He lamented why, in last week’s budget, the UK government had given “£1,500 [€1,750] of tax cuts to someone on an MP’s salary”, while presiding over cuts to stuttering public services and a rollback of public investment.
“Don’t tell me Westminster doesn’t have the wrong priorities,” he said.
Yousaf rejected cuts as “disastrous”, Brexit as “catastrophic” and accused the Tories of being more interested in fighting a “culture war” than in managing the UK economy, as part of a “scorched earth policy of “a party that knows it is on its way out of power”.
The UK, he said, is now “a poor society with pockets of rich people”.
“This is all a far cry to what was promised [by union supporters] to Scotland’s voters at the time of the [rejected] independence referendum in 2014.”
Based upon an estimate of £69 billion being wiped from UK national income by Brexit, Yousaf claimed that the vote had cost Scotland at least £1.6 billion in revenues to spend on public services.
But enough of the gloom, he said. Yousaf argued that independence for Scotland would allow it to break free of the ruinous cycle that the UK seems locked into, allowing it to boost public investment, make its tax system more progressive and spur investment in renewables, food and drink and high-tech industries.
“Ireland has particular lessons for Scotland,” said the first minister. He cited former Trinity economist Kevin O’Rourke who linked the Republic’s economic development to its EU membership.
“The more Ireland diversified its trade and opened up capital inflows, the wealthier it became,” said Yousaf.
After exchanges with the media, during which he accused the Tory party of being “institutionally Islamophobic”, he fielded queries from the LSE students and alumni who comprised most of the audience.
An Irish political economy student named Evan asked how an independent Scotland would partner with the Republic. He responded that they would always be “close allies” and that he would like the British-Irish Council to become the “British-Irish-Scottish” council.
He said the Republic and Scotland could co-operate on shared problems such as housing, maybe even by sharing building methods for modular housing. Together with Norway, the two Celtic cousins could also solve Europe’s energy woes with their renewables prowess, he said.
Yousaf demurred somewhat when it was said that the Irish economic model is based on low corporate taxes and if the Republic is such a model for Scotland, does that mean he would do an about-turn and slash business taxes too?
He downplayed down that suggestion but highlighted a report by Scottish billionaire Tom Hunter who has recommended Scotland look for a way to cut taxes for specific industries, instead of across the board.
That’s an interesting idea, he said.
“Ireland will always be a model that we look to. But Scotland would also want to tread its own path.”
- Sign up for Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Find The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
