We need to stop comparing economies - it's not a competition

The Herald Scotland

10-07-2025

Occasional contact with a 'real economy' is a useful corrective to such selectivity in either direction. The transformation in Ireland, particularly from the 70s through to the 90s, helped by a lot of EU money and the Celtic Tiger, was remarkable but far from complete.
There's plenty wealth in Ireland but there's also poverty, as a wander through Dublin or Limerick or Cork will confirm. In other words, there is a lot more in common with our own problems than the cherry-pickers like to admit. It's not a competition.
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According to a report by Barnardo's this very week, more than a quarter of Irish parents did not have enough food to feed their children. In 2023, Ireland spent 8.1 per cent of GDP on welfare compared to 10.8 per cent in the maligned UK.
Wherever else the profits of Apple et al have gone – back to the US actually - it's not into an NHS we would recognise. My taxi driver was telling me about the 80 euros he paid for a visit to a GP with another 80 to have bloods taken. These are cherries which the myth-makers choose not to pick.
That's before they move onto Norway where the comparators are equally selective. In summary, the cherry tree of Scottish Nationalist dreams combines the low business taxes of Ireland with the high welfare spending of Norway, to produce a Valhalla that exists precisely nowhere.
Maybe we should put more effort into learning from every possible source rather than creating dodgy comparators. It's not only (or primarily) small states we should look to but successful devolved structures which work well within larger states. That is more the European norm but we never seem to have much interest in the concept of two governments working comfortably together.
There are always trade-offs and the inward investment exchanges stirred some memories. In 1997, as Scottish industry minister, pre-devolution, I inherited a boom in inward investment and an extremely effective Locate in Scotland operation to secure it. One of my first duties was to get on a plane to Japan and Taiwan with a packed schedule of visits to great corporations which were employing huge numbers of Scots.
We used to host receptions in Edinburgh Castle for these large business communities which inward investment had brought to Scotland. Nowadays, they would be much smaller affairs. However, I was acutely aware of the contradiction that we were living off the back of what was actually a Tory success story; albeit one based on a dubious selling point and limited shelf-life.
The two factors that made Scotland such an attractive inward investment destination were (a) that we were inside the EU, and (b) that the Tories had not signed up to liberal employment laws from Brussels, making it easier and cheaper for businesses to hire and fire in the UK than elsewhere in the EU. It had been a political bone of contention when Locate in Scotland used that 'advantage' in promotional literature.
Anyway, that bubble duly burst, as inward investment bubbles generally do. The EU expanded to take in countries like Romania and Hungary where labour costs were lower, incentives greater and the workforce better educated, particularly in IT and language skills. The days of it being hardly worthwhile to hold a press conference for less than 500 jobs in Silicon Glen were well and truly over.
Scotland's inward investment strategy has had to adjust itself accordingly and there is still a very professional operation competing in a highly competitive market, as it should be. Direct Scottish representation around the world existed long before devolution and carping about it is misguided, within its well understood parameters.
The recent Scottish Government press release announced 135 inward investments last year, which sounds pretty good, but omitted to mention the number of jobs involved. That is unnecessarily coy when everyone knows times have changed. If fewer jobs equate to greater sustainability, then that should be explained and argued for. But inward investment should never be over-depended upon again.
Grangemouth (Image: PA)
One of the lost opportunities of the past 20 years, for example, has been the failure to prepare Scotland's industrial base for the transition to renewable energy, so that 90 per cent of the hardware in offshore windfarms will be imported. Could we not have done better if there had been an industrial strategy for Scotland?
Times may be about to change in Ireland too. There is trepidation about the outcome of President Trump's tariff threats because of Ireland's high degree of dependency on American corporations attracted by very low taxation. Much of their business in Ireland involves exporting finished products back into the US. If tariffs wipe out the tax advantage, they might not be around for long.
I'm sure some Scottish cherry-picker will soon be telling us about this year's high growth rates in Irish GDP. What they won't mention is that they have been caused by a rush to export products to the United States in an effort to forestall the threat of American tariffs!
So while inward investment comes in waves for reasons that change over time, our home industrial base should go on for ever – if it is properly supported. That should not just be on an ad hoc basis when things go wrong as currently tends to be the case. The problems of Grangemouth and Alexander Dennis were, for example, well forewarned.
Hopefully common sense will start to prevail in relation to defence industries and, who knows, even nuclear in which Scotland has huge manufacturing and research capacity, if they are allowed to use them. The grass on the other side need not always be greener.
Brian Wilson is a former Labour Party politician. He was MP for Cunninghame North from 1987 until 2005 and served as a Minister of State from 1997 to 2003