Sturgeon Brings Forward £100m Post-Brexit Stimulus Funding

10/08/2016 - Scotland’s first minister has today unveiled what is billed as a post-Brexit economic stimulus package, bringing forward £100m of planned infrastructure spend into the current year and announcing a range of new business support measures.

Nicola Sturgeon pressed prime minister Theresa May urgently to follow suit, both by pulling together a body of UK-wide stimulus measures that could unleash further capital spending capacity for Scotland through Barnett consequential transfers and by providing early assurance about the future of EU structural funds.

It follows Scotland’s 62% vote at June’s referendum in favour of retaining EU membership, and came a day after Sturgeon held talks in Berlin with Germany’s Europe minister Michael Roth. In a conscious echo of May’s “Brexit means Brexit” soundbite, Sturgeon has said that for Scotland “remain means remain”.

Sturgeon’s statement described the extra £100m of funding for infrastructure as the start of a continuing acceleration programme, targeted particularly on health, and measuring projects against a set of priority criteria including potential to start quickly, number of new jobs to be created, and anticipated impact on both supply chain activity and geographic spread.

Scottish ministers will also set up a new dedicated Scottish government service to provide information and support for businesses affected by the referendum outcome. It will be backed up by a Post-Referendum Business Network to promote discussion with businesses and business representative bodies, the Scottish Trades Union Congress and the Scotland Office.

Sturgeon made the announcement at the showcase Golden Jubilee Hospital in Clydebank, which is to receive a £5m capital injection under the new measures. She said her government would continue to pursue every possible path to protect Scotland’s relationship with the EU, but added: “It is also important to act now to support and stimulate the economy.”

She insisted that Scotland remained an attractive place to do business, but acknowledged that the referendum had created an economic uncertainty whose adverse effects were already being felt.

“The UK government has not yet taken any meaningful action to alleviate uncertainty or to boost confidence, and there are very real concerns that the damage to the economy and to jobs will be severe and long-lasting,” Sturgeon said.

“It is against this background that the Scottish government is announcing early action to boost confidence, stimulate economic activity and support business.”

Her initiative was strongly endorsed across the Scottish economic community. STUC general secretary Grahame Smith said his organisation would contribute positively to the new business network. “The Scottish economy, already weak due to the downturn in the oil and gas sector, risks falling into technical recession as a result of Brexit-induced uncertainty,” Smith warned. 

Liz Cameron, chief executive of Scottish Chambers of Commerce, called the package “a great example of the Scottish government using devolved powers to deliver a timely boost to the Scottish economy”, while Andy Willox from the Federation of Small Businesses said it was important to extract “every drop of value” from the new capital funds.

Source: Public Finance Magazine