A Kingdom of two halves: Is Scotland on its way to becoming a middle income nation?

31st August 2011

Douglas McWilliams, the chief executive of thinktank Centre for Economics and Business Research believes that Scotland lacks entrepreneurship, misspends money and suffers from too much government intervention.

This will mean that it will have the same living standards as Turkey, Poland or Korea. He previously suggest that Scotland would be a middle income country by 2050 but believes the country's relative decline is accelerating.

The Scotsman reports that in Scotland in 2009 there were only 2.6 new businesses started per thousand of population whereas for the UK as a whole the figure was 3.9 and that the identifiable public expenditure in Scotland was 54.8 per cent of gross domestic product (GDP) in 2009/10 compared with 47 per cent in England.

Commenting on the Scotsman, Intervention tends to think the whole of the UK is there already.

"Under the Union we are already a third world nation. The total debt caused by Gordon Brown's disastrous stewardship of the economy is now (July 2011) estimated to be as much as £2.049 trillion (UK government figures). This breath-taking figure is equal to 80 per cent of UK output and is three times the combined national debts of Greece, Spain, Portugal and Ireland."

But not all commentators agree. The BBC's Scotland business editor Douglas Frasier wonders is Scotland is doomed by comic economics.

"An economist of Prof McWilliam's calibre ought to have noticed that reference to "Third World" countries was so last century. Secondly, the idea that Spain, Greece, Portugal, Korea, Poland and Turkey have "Third World economies" is intended to provoke reaction in Scotland, but is merely offensive to those other countries.

"They've been closing the gap by their success, not because of Scotland's failure – growing by becoming developed economies (though some of them growing also by borrowing far too much, which is another story altogether, which is slowing their growth paths).

"Perhaps CEBR might like to take a look at the state of Korea's telecoms infrastructure, for instance. Not "Third World", but world-leading."

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