FORMER SNP MSP and economist Andrew Wilson has set out his proposals for the Scottish Government’s borrowing powers, which would include the country issuing its own bond to the markets.
Wilson, who has also worked as a business economist at the Royal Bank of Scotland, explained in a column for The Times why “radical changes” are needed for the nation’s economy.
He welcomed the new advisory council for economic transformation set up by Finance Secretary Kate Forbes, describing it as a “group of diverse talent”, but called for a focused strategy to be agreed and launched “urgently”.
With regional inequality in the UK among the worst in the developed world, in-work poverty a reality for many and the climate crisis already causing problems, it’s time for “risks and choices”.
“Politicians must embrace change, because if they don’t they are taking a far bigger risk,” he wrote. “Standing still will be fatal. The advisory council will have many issues to consider, but I offer one piece of advice that could be critical: acquire the firepower to make meaningful change happen.”
The next step, Wilson argues, is Holyrood agreeing to and seeking an extension of Scotland’s borrowing powers – and issuing its own bond to the markets in return, as a way to be seen to bear the risk.
“The scale of this will need to be tested to reflect the scale needed to invest in change, the appetite of the markets and the affordability of servicing the cost,” he added. “Anywhere between £10 billion and £25 billion could be needed in time.”
The Growth Commission chair argued that the move would “skirt the partisan debate” as it would represent a maturation of the Scottish Government and parliament. It would also help pro-independence figures as it would “continue to build the competence of the Government”, and prepare it for borrowing as an independent country.
Wilson acknowledged issuing a Scottish bond would carry a bigger risk premium than the UK’s, but if spent wisely has serious potential. It could be allocated to net-zero investment, new tech, important infrastructure projects, education, health, and policies to tackle deprivation, he wrote.
Over time the income the bond brought in could cut risk, he suggested, lowering its price.
“A new long-term Scottish net-zero social and economic transformation” bond or bonds could be attractive, could unlock needed change and investment, and could underpin a meaningful strategy that delivers rather than sits on a shelf,” he concluded.
On social media, Wilson prompted some debate. Sam Taylor of Unionist think tank These Islands doubted Wilson’s theory. “Andrew Wilson believes that if the Scottish Government were able to issue up to £25 billion of bonds, they would carry a ‘not too large’ risk premium over gilts,” he wrote. “I would love to see the ‘market evidence’ which led him to this conclusion.”
However Tom McCallum praised the argument, adding: “There are ways to do this if the will is there. Sure you will here lots of “cannae dae that”, and am reminded of the phrase ‘those who say it can’t be done shouldn’t interrupt those who are doing it’. Time for Scotland to be brave and confident.”