The Scottish economy [July 1980]

Bell, David N.F. and Fraser, Neil and Hamilton, Douglas and Harrigan, F. and Jowett, Anne and Kirwan, Frank X. and McNicoll, Iain and Moar, Lyle and O'Donnell, N. and Orton, Ian (1980) The Scottish economy [July 1980]. Quarterly Economic Commentary, 6 (1). pp. 6-27. ISSN 0306-7866

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As suggested in the UK section, the government faces a number of dilemmas in respect of its economic policy. Under a barrage of criticism, particularly as a result of the increase in unemployment, ministers are perhaps having second thoughts about the wisdom of the policies which they currently pursue. This commentary and the previous one have highlighted the radical change which a monetarist strategy has entailed in the targets and instruments of macro-economic policy. The money supply and public borrowing have become ends in themselves in the short-term. In the longer term these implicitly suggest the further aims of a reduction in the rate of inflation and in the economic role of the state. At the micro level, the strategy also favours consumers at the expense of producers. After a long period in which producers have been the recipients of many forms of state aid, the present accent on non-intervention and on the free play of competitive forces has made the life of the production sector a good deal tougher. In consequence the government has had to deal not only with the predictable wrath of the unions but also with the growing unease of employers and entrepreneurs. The recent 1% reduction in interest rates, which could hardly be justified by the money supply statistics, was probably intended to allay the fears of this latter group. Given its limited extent it is unlikely to be wholly successful.