2. To ask the Scottish Government what its response is to the latest Scottish Fiscal Commission forecasts for economic growth. (S5O-01635)

The Scottish Fiscal Commission forecasts for economic growth underline the fundamental strengths in our economy. Economic growth is forecast to continue and employment will rise further, with earnings growth forecast to match that in the United Kingdom. However, the forecasts also highlight the negative impact that Brexit will have and the challenges that Scotland faces from a declining working-age population.

The draft budget sets out a package of measures to support the economy, unlock innovation and drive productivity.

I remind the cabinet secretary that the Scottish Fiscal Commission is forecasting that the economy will grow by less than 1 per cent for each of the next four years, which is a fraction of the growth that is expected for the rest of the UK.

The Fraser of Allander institute has said that such low trends in economic growth for Scotland

“have not been witnessed in 60 years.”

Predictably, the cabinet secretary blames Brexit, but he knows that under the Scottish National Party the economy has underperformed for the past decade—since well before Brexit. Given the SNP’s abysmal track record and the dire economic outlook, does the cabinet secretary agree with leading organisations across Scotland that it is now time for a change in economic policy, that the SNP’s four I—investing, innovation, inclusive growth and international—economic policy is not working and that Scotland needs a new direction in economic policy?

I think that the enthusiasm from the Tories is about to dissipate.

Dean Lockhart went straight from the SFC forecast to the FAI forecast. The Fraser of Allander institute’s forecast for economic growth is far higher than the SFC forecasts. So, for that matter, is the EY forecast for Scotland’s economy. Both are higher than the SFC’s forecasts, which have been seen as being arguably quite conservative and cautious.

I gently point out that the Scottish Government’s interventions on the economy and business are strong. However, surely the UK Government has to take some responsibility for the economy—indeed, it argues that it has overall responsibility for it. I argue that it is the UK economic model that is failing the people of Scotland.

I will cite just a few interventions that I propose to make in the budget. There is extra support for business rates, in the most generous package of business rates relief ever. There are more interventions around innovation, and in skills and manufacturing. There is resourcing of the building Scotland fund, capitalising of the Scottish national investment bank and doubling of support for city deals. All that is great for Scottish investment, Scottish productivity and Scottish innovation, but it is all put under threat by the reckless approach of the UK Government when it comes to Brexit and the impact that it will have on Scotland’s economy, according to the Scottish Fiscal Commission.

I remind members of my role as parliamentary liaison officer to the Cabinet Secretary for Economy, Jobs and Fair Work.

The cabinet secretary will be aware that a key reason that the Scottish Fiscal Commission gives for Scotland’s low economic-growth forecast is our projected population profile as a consequence of the impact of Brexit on Scotland’s economy. Its view is that Scotland’s economy is already growing at capacity and needs more working-age people in order to expand. Does the cabinet secretary agree that the views of the Scottish Fiscal Commission are further evidence of the damage that the Tory hard Brexit will do to Scotland’s economy?

I agree—[

Interruption

.] I hear the Conservatives chortle that no one else agrees, but wiser Tory ministers, even, are coming to the conclusion that a hard Brexit and a no-deal Brexit might well be profoundly damaging to the UK economy and would, in turn, be damaging to Scotland’s economy. It is right to say that the more powers we have, the more we can engage and make the right decisions for Scotland. It is true to say that the Scottish Fiscal Commission identified the working-age population as a major challenge. We can tackle that properly only if we have the powers to do so and the flexibility to rise to that challenge.

I point out gently that many people have reported on the economic impact of Brexit on Scotland, and have identified a negative impact of up to £11 billion a year from 2030, with at least 80,000 fewer jobs over the next decade. New analysis from the

Financial Times also shows that the vote to leave the European Union is already having an impact on the UK economy of about—surprisingly—£350 million a week. Was not that the figure that the Tories were going to invest in the national health service if Brexit occurred? It is the cost, right now, of its mishandling of Brexit. We could do so much more if we were not wedded to the UK mismanagement of our economy and the Brexit negotiations.

As the cabinet secretary has just articulated, one of the biggest economic issues facing the country is the impact of the UK’s withdrawal from the European Union, which my party still passionately opposes. Does the cabinet secretary agree that, as the Scottish Government’s existing economic strategy from 2015 is developed and updated, it will be essential that it takes account of and, where possible, addresses the new and emerging challenges that arise from Brexit, and that it is a living document that we must keep revisiting?

Of course our economic strategy should develop and evolve in the light of events, which is why we have so many positive economic interventions in our budget. That will ensure that, no matter the challenges that are thrown at us, we can invest in the people of Scotland and their skills to grow our economy, tackle productivity and, crucially, have the right tools to ensure that we also have the working-age population to support our economy. Of course that strategy will have to adapt in the light of circumstances.