As Scottish economy stands on brink of recession, Common Weal renews call for National Investment Bank

SNP Conference backed a Scottish National Investment Bank in March

COMMON WEAL has renewed calls for the Scottish Government to establish a multi-billion pound Scottish National Investment Bank to kick-start the Scottish economy, in light of dire predictions of Scotland being on the brink of recession.

Laurie MacFarlane, author of Blueprint for a Scottish National Investment Bank, report by Common Weal and New Economics Foundation which found a public bank could create 50,000 jobs within a few years of being established, stated:

“With low levels of investment now pushing Scotland’s economy to the brink of recession, the need for fresh thinking is greater than ever. A new Scottish National Investment Bank would channel billions of pounds of low-cost investment to the areas of the economy most in need. In doing so, it would boost productivity, expand the business base, support the creation of thousands of new jobs and generate billions of pounds of savings for the public purse."

"If the Scottish Government is serious about revitalising its domestic agenda and staving off recession, it must embrace bold economic reforms. Tweaking round the edges of existing policy will not work. Learning from best practice around the world and establishing a fully functional National Investment Bank is a good place to start."

"If the Scottish Government is serious about revitalising its domestic agenda and staving off recession, it must embrace bold economic reforms. Tweaking round the edges of existing policy will not work. Learning from best practice around the world and establishing a fully functional National Investment Bank is a good place to start." Laurie MacFarlane

A report by the Fraser of Allander Institute released today stated that, with figures out in July, it will be “a close run thing” as to whether Scotland officially has re-entered recession.

The FAI report states that the Scottish economy is “stuck in a cycle of weak growth” with households experiencing a “lost decade” of stagnating living standards as wages remain suppressed and inflation picks up, questioning why there was so little debate on Scotland’s economy in this month’s General Election.

The economic analysis comes as First Minister Nicola Sturgeon admitted in her statement to the Scottish Parliament on Wednesday that the Scottish Government must “take stock and refresh” its domestic agenda after 10 years of SNP power at Holyrood.

Labour’s General Election Manifesto made a similar proposal for a regional bank based in Scotland as part of a new UK-wide bank.

The proposal for a Scottish National Investment Bank was backed by the SNP at its party conference in March.

[A Scottish National Investment Bank] could finance the creation of high-pay, quality jobs in the productive sectors of the future, like renewables, advanced manufacturing and zero-carbon house building. This could turbo-charge the Scottish economy and kick-start a new era of green reindustrialisation.” Ben Wray

Ben Wray, head of policy at Common Weal, said the Scottish Government could establish a bank now of similar proportionate size to the German Kreditanstalt für Wiederaufbau (KfW) which invests billions every year into productive and innovative economic development.

“The Scottish Government desperately needs a new financial mechanism to boost investment, because we know the UK Government under the Tories aren’t going to do it. A Scottish National Investment Bank is the most direct way to do this on a big, multi-billion pound scale.

“We estimate it would be possible for the Scottish Government to establish a bank of proportionate size to the German KfW, which is the fifth biggest capital issuer in the whole of Europe.

“A bank of this size could finance the creation of high-pay, quality jobs in the productive sectors of the future, like renewables, advanced manufacturing and zero-carbon house building. This could turbo-charge the Scottish economy and kick-start a new era of green reindustrialisation.”

Common Weal published a report immediately after the General Election advocating six ways the Scottish Government could refresh its domestic agenda, including setting up an investment bank, restoring Scotland’s town centres and reversing plans to cut Air Passenger Duty and spending the money instead to create a world-class childcare system.