TIME for an economic round-up. This year is providing a few surprises on the economy front. Which is important at a moment where more folk across the globe are voting in elections than ever before – around four billion potentially.

So you’d think politicians would be obsessed with fixing things such as inflation and low productivity. Actually, they seem more concerned with offering electoral bribes than providing long-term solutions.

First, the economic headlines. Inflation isn’t going away, especially in the US. OK, the rate at which prices are rising has decelerated but by less than the markets predicted. Which means interest rates are not going to fall as much this year. Cue a mild panic as investors and fund managers realise they got it wrong. Suddenly the financial metrics have gone haywire.

Second, stock prices for high-tech companies – which looked like crashing last year – have gone stratospheric again. This seems to be a boom set off by expectations of huge profits from artificial intelligence apps. This surge in expectations has boosted US growth – the reason inflation is not falling as expected.

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But the massive success of the American economy has repercussions for a laggard UK and Europe. The US dollar has surged in value, depressing European currencies. Lower currency values mean imports are more expensive in Europe, adding to inflation. Oops! That means we’re stuck with higher interest rates – and that slows economic growth.

Yes, it’s complicated. But that’s why politicians have experts to help them. Unfortunately, the politicians are ignoring advice just as the global economy is edging towards a precipice. Which explains why the price of gold has surged recently.

Gold is a safe haven where you put your readies when it looks like the economy is going to Hades on a handcart. The gold price is always a quiet marker for what rich folk really think about economic prospects.

Also, the price of oil and gas is starting to climb again thanks to global political uncertainties. A few more missile exchanges between Iran and Israel will soon show up in your gas bill.

Not that these economic wobbles are bad for everyone. The jump in the value of the US dollar had interesting consequences.


Big UK companies earn their dosh in dollars, not pounds. This is because they invest abroad and not in Britain, which explains poor productivity at home.

A rise in the value of the dollar means (when turned into declining pounds) that the largest UK companies are booking more profits. Cue a surge in share prices last week to near record levels on the London stock exchange. That makes the rich feel even richer – at least temporarily.

That the rich are getting richer while the poor are getting poorer is no surprise – but the scale of the differential is astonishing. A modest straw in the wind – Ferrari, the luxury Italian car manufacturer, just posted a record $1.26 billion net profit for 2023. That’s profit not revenue.

The National: Bentley Azure

Bentley in the UK has seen its profits rise tenfold since 2019, to a whopping half-a-billion pounds. These vast returns are the product of conspicuous consumption. The cost of a customised Rolls-Royce is now above £1 million. At Ferrari you can now customise your own individual sports car.

Income differentials are apparent particularly among the young. The average person in the UK born around the millennium has absolutely zero housing wealth, while folk of my “Boomer” generation had been homeowners for years at their age. True, the top 10% of millennials own around £300,000 in house assets, thanks to help from mummy and daddy. But the rest are still living in mum and dad’s broom cupboard.

All this points to the need for economic policies focused on growth. Leave aside complex debates about whether we want to grow nominal GDP or increase productivity. I’m not in favour of frying the planet but I do want to improve living standards as an urgent necessity. We need to fix the economic engine for everyone. And that is not happening.

Back when John Swinney (below) was finance secretary in the first SNP government under Alex Salmond, there was a policy focus on economic growth. John proposed raising average GDP growth in Scotland. Between 1975 to 2005, growth averaged 1.8% – hardly startling. In the early millennium, with devolution, average growth rose to 2.1%. John wanted it to be even higher.

The National:

I remember doing the occasional gig as a professional economist being questioned by Holyrood committees on how to achieve this.

Without full economic independence, setting a specific growth target and achieving it was difficult. But the very act of setting a target – called “indicative planning” – gives everyone in the economy something to aim at.

Alas, John’s early efforts at boosting average growth were interrupted by the 2008 banking crisis and the subsequent global recession. Even then, he got Scotland out of recession faster than in England, by cutting those taxes in his power and raising public investment, especially in social housing. It can be done, if there’s a will.

But since those heady days, the Scottish government has become much more reticent about setting growth targets.

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True, in the aftermath of the Covid pandemic, Nicola Sturgeon appointed several blue-ribbon commissions of the not so great and who knows how good, to plan economic recovery. But these efforts proved fruitless. No-one was willing to prioritise or take hard decisions regarding where to put resources.

At the same time, politicians in Scotland and elsewhere have used the excuse of achieving net zero emissions as a way of avoiding responsibility for generating faster economic growth. For starters, investing in low-carbon technology is an obvious way of upping manufacturing and economic growth rates.

Zero carbon won’t come by itself – it requires an industrial and investment strategy. And that we don’t have, a Scottish or a UK one. One reason for this is that an industrial strategy means prioritising investment over consumption.

And politicians – whatever their platitudes – hate making hard choices.

The National: grangemouth.

Take the case of the Grangemouth oil refinery, which is about to close in the middle of a global refining shortage. We’re good at this. Scotland closed down most of its shipbuilding capacity in the middle of a global boom in tanker and container construction.

Are we about to stop using petroleum products tomorrow? Or even 20 years from now? Of course not. The decision is whether or not to maintain Scottish industrial capacity – and initiative – during the inevitable transmission. Alas, as far as Grangemouth is concerned, the Scottish government has gone missing in action.

However, the sins of the UK Government are much greater when it comes to the absence of any growth strategy. Jeremy Hunt is focused in building a war chest so he can bribe the voters, come the morning that Rishi Sunak wakens up and decides to call an election.

Growth strategy? Productivity strategy? Science strategy? Never heard of them, mate. And don’t think Sir Keir Starmer will be any better. Which explains why those in the know are buying gold to hide under the bed.