IFS thinktank ‘humiliates’ Nicola Sturgeon over Growth Commission austerity plan

THE independence blueprint set out in the SNP’s Growth Commission report would be a “continuation of austerity”, the country’s leading economic thinktank has said.

The verdict from the Institute of Fiscal Studies (IFS) is a sharp blow to Nicola Sturgeon as she prepares to face SNP members at the party’s conference in Aberdeen this weekend.

In repeated defences of the Commission report, which has been attacked by the Left of the Yes movement, the First Minister has insisted it would not bring about austerity.

However the IFS said that the plan for public spending growth to trail 1 per cent below GDP growth in order to halve Scotland’s deficit after independence would deliver just that.

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Scottish Labour said the judgment was “humiliating” for Ms Sturgeon, and proved its argument that the SNP was ready to embrace austerity as the price of independence.

David Phillips, the associate director of the IFS, told the Daily Telegraph the Commission’s formula would see public spending fall 3 per cent behind GDP growth after 10 years.

He said: “It’s a continuation of austerity. If public spending growth is 1 per cent less than GDP growth, that’s austerity.”

The state would become a “smaller slice of the pie”, the economist said.

Mr Philips said the Commission’s proposals were “certainly more cautious” than those in the 2013 White Paper on independence jointly launched by Ms Sturgeon and Alex Salmond.

However he questioned why it did not factor in any negative economic impacts arising from independence, yet did refer throughout to the risks of Brexit.

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Mr Philips said that if the Growth Commission formula wasn’t considered austerity, then the UK wasn’t going through austerity either – yet it “clearly” was.

He said: “On their definition, we’re not currently in austerity in the UK, but we clearly are, as the state is substantially falling as a share of the economy.”

The Commission, chaired by corporate lobbyist Andrew Wilson, was been repeatedly attacked by the Left of the Yes movement over its tight public spending plans, focus on deficit reduction, and recommendation to keep the pound and be tied to UK monetary policy.

Scottish Labour is now trying to use the report to bracket the SNP and Tories as pro-austerity.

Labour MSP Jackie Baillie said: “This is humiliating for Nicola Sturgeon, who has gone from pretending to be John Maynard Keynes to George Osborne in less than a generation.

“Her so called Growth Commission has been effectively branded a cuts commission by independent experts. Nicola Sturgeon is losing credibility fast by defending this approach.

“With one in four children living in poverty Scotland cannot afford another decade wasted at the altar of deficit reduction.

“The cuts commission declares that Scotland hasn’t had enough of experts, I agree, and those experts are saying the SNP is promising a toxic cocktail of cuts and instability.”

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An SNP spokesperson said: “The Sustainable Growth Commission report is absolutely explicit in its rejection of austerity and in its recommendation for real-terms spending growth – including an economic stimulus package where necessary – a sharp contrast to the reality of Tory policies being imposed on Scotland.

"What’s more, the fiscal projections in the report are based upon very prudent assumptions on growth, whereas the wider report goes on to make constructive, credible proposals on how to boost growth beyond that level.”

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