Commenting on the publication of the report by Moody’s Investors Service – which changes the UK’s AAA rating from stable to negative, Finance Secretary John Swinney pointed out that the first reason given in the report is:
“The increased uncertainty regarding the pace of fiscal consolidation in the UK due to materially weaker growth prospects over the next few years, with risks skewed to the downside.”
“The Chancellor purports that this threat to the UK’s ‘triple A’ credit rating is a ‘reality check’ for everyone else, when the reality is that it is a commentary on his stewardship of the economy.
“Mr Osborne has turned a blind eye to the detail of the report, because the very first reason given by Moody’s for their decision to change the UK’s rating from stable to negative is the UK’s ‘weaker growth prospects’.
“The UK economy is stagnating as a result of the Westminster Tory/Lib Dem coalition’s failure to deliver a ‘Plan MacB’ approach to stimulate the economy with increased capital investment. The Chancellor has ignored every warning – including from the devolved administrations – that growth would suffer as export markets weakened in the eurozone, and failed to take the necessary action to compensate by stimulating demand through enhanced infrastructure spending.
“The UK Government need to get capital spending up now, in order to get growth and confidence back into UK economy.
“Right now is the danger point in terms of the UK economy re-entering recession – the last quarter of 2011 already recorded a decline in output – yet over 70 per cent of the Chancellor’s proposed action on capital spending is not due to happen until 2013-15.
“Capital investment is central to the Scottish Government’s approach, with every additional £100 million of capital spending supporting around 1,400 jobs in the Scottish economy. We are expanding our infrastructure programme through the £2.5 billion Non-Profit Distributing pipeline, by switching resource to capital spending, and through a range of innovative financial mechanisms.
“As a result, by 2014-15 our overall capital investment in Scotland’s economy will be 25 per cent higher than in this year - set against the back drop of a 32 per cent cut to the Scottish Government’s capital budget by the UK Government over four years.
“In last week’s Budget, we allocated an additional £382 million of capital investment in new transport, housing and digital projects. That money will build new roads, deliver new homes and upgrade to high speed broadband, targeted in rural areas.