WHAT will the economy look like after we come out of lock-up? Don’t expect business as usual – in the short-term or possibly ever. Perhaps realising this, on Friday the First Minister appointed an “independent” brains trust to provide advice to Scottish Government in facing “the challenge of our long-term recovery in the wake of this pandemic”.

The group is headed by an establishment figure and former banker, Benny Higgins. Mr Higgins is chairman of feudal landowner Buccleuch Estates. With respect to the FM, I think appointing Mr Higgins sends out all the wrong signals.

The past week has seen a number of reports suggesting the scale of the world recession following the lockdown could be far worse than originally predicted. On Friday, the International Monetary Fund (the main global forecasting agency) predicted the international economy will shrink by 3% this year, the steepest decline since the Great Depression of the 1930s. Gita Gopinath, the IMF’s chief economist, says the crisis could knock £7.2 trillion off global GDP in the next two years. That’s worth the equivalent of three whole UK economies wiped out.

The IMF also predicts the UK economy itself will shrink by 6.5% this year, compared to the IMF’s original January forecast for an increase of 1.4%. Don’t be misled by the numbers looking small. A drop in output of this magnitude is one-third bigger than the 4.2% fall seen in the wake of the 2008 financial crisis.

The UK Government’s Office for Budget Responsibility has made its own estimates of the bump to output, published last week. The OBR reckons GDP will be down by one-third in the second quarter but then start to bounce back. However, the OBR’s overall estimate for 2020 is a 13% contraction in output – double the IMF calculation. Which suggests that everyone is just guessing how bad things are going to be.

The big question nobody can answer yet is just how long will recovery take? The British OBR is still pretending the recovery will be fast. Supposedly, once everyone is out of lockup, production and consumption will simply bounce back. Consumers, frustrated by being cooped up for a couple of months, will rush to the shops. But will they?

The big issue is the ball and chain of increased debt. The global lockdown is forcing both individuals and businesses into debt, as wages and cashflow dry up. Governments, too, are taking on gigantic debts to aid the economy – the OBR reckons UK public borrowing will jump by £218 billion this financial year, creating the biggest single-year deficit since the Second World War.

Governments can hide some of this debt for a time. In the UK, for instance, the Bank of England is printing lots of electronic money and buying in existing government IOUs. However, private individuals have no such recourse. A combination of higher unemployment and greater personal debt could trigger a downward spiral in consumption spending.

However, the biggest hit on the global economy is the fall in share prices since March – by around one-third across the globe. Share prices were already artificially high thanks to central banks printing money (so called quantitative easing) to create artificial demand for financial assets.

This share price bubble may have been pricked permanently by the virus crisis. If so, pension funds and insurance companies will be massively poorer. This, in turn, will lead to less consumer spending (as savers are penalised) and a fall in investment (as funds hoard capital). Which means we will not revert to “normal” levels of output.

Plus, there’s a joker in the economic pack. With so much economic dislocation, expect companies and countries to redouble their competitive instincts. If you are already facing the wall, then there is an incentive to slash prices to boost sales.

ALSO expect governments to raise tariff walls, in order to protect domestic economies from future disruptions in global supply chains. The post-coronavirus world will be one of dog-eat-dog in the business and financial sectors. That can only reduce profits and wages everywhere.

How to respond? I suspect Mr Higgins, the FM’s new adviser, will recommend rebooting the economic status quo. Personally, the independent Scotland I want to live in will communalise the 217,000 acres “owned” by Mr Richard Walter John Montagu Douglas Scott, aka the 10th Duke of Buccleuch. I certainly think that any post-virus economy should fund the public purse with a wealth tax on land holding.

Equally, I think the massive public bailout of private business should be offset by taking in return an equity stake in those companies aided. The resulting public ownership of dividends could create the basis for a permanent Universal Basic Income.

I doubt if Mr Higgins will agree. Which is my basic point: you cannot discuss an economic recovery programme without deciding what kind of economy you want to build. I respect the FM’s desire to put in place such a recovery plan.

But her brains trust of advisers cannot be restricted to those who created the economic mess of the past decade.

Mr Higgins resigned as head of Tesco Bank in 2017 after a cyber-attack resulted in 9000 customers having money removed from their accounts. Tesco Bank was fined £16.4m over the incident.

I would therefore urge the FM to appoint a wider range of radical thinkers to her new advisory group. It must include trades union reps and folk with a detailed understanding of the green economy, such as Common Weal’s Robin McAlpine.

It should be multi-party; can I nominate Green MSP Andy Wightman, whose tenacious investigations of exploitative landowners is legendary. It should also eschew the usual establishment business and banking figures who seem to have a stranglehold on public appointments in Scotland.

In this regard, the staffing of the new Scottish National Investment Bank (SNIB), which Benny Higgins designed, is worrying. The SNIB is a key tool in any economic recovery programme. Provided, of course, that its investment mission is determined by political discussion and not by career bankers.

Alas, in one of his last acts as finance secretary, Derek Mackay appointed Willie Watt as chair of the SNIB. Mr Watt was boss of Martin Currie Limited (registered in Bermuda), a US-owned investment fund. Martin Currie Limited was recently fined £8.6m by US and UK regulators for failing to manage a conflict of interest between two clients.

Then, last week, the new CEO of the SNIB was announced. She is Eilidh Mactaggart, formerly of the several times fined MetLife, America’s biggest insurance company. Ms Mactaggart’s annual “base” salary is £235,000. The FM’s salary is £135,605. This is taxpayers’ money being used to pay a middle-rank, former investment banker twice (with bonuses) what Nicola Sturgeon gets for running the entire country during a plague.

That does not bode well for the economy the present SNIB will build after the lockdown. Can I suggest the FM calls a national economic convention, once we regain our freedom, to give a popular voice to planning our post-virus future?

A better world is not only possible – it is necessary.

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