Scotland’s First Minister, John Swinney, is set to urge the UK government to revise fiscal rules to allow increased borrowing for public sector investment. This appeal comes ahead of the UK Budget announcement on October 30.
Swinney will deliver his speech in Edinburgh to an audience of academics, think tanks, and representatives from various sectors. Swinney is expected to criticize anticipated budget cuts by Chancellor Rachel Reeves, advocating instead for enhanced public investment.
He will propose altering fiscal rules to support infrastructure development, noting that current regulations cap public sector borrowing at 3% of GDP. Highlighting the disparity in investment levels,
Swinney will point out that advanced economies in the OECD invest nearly 4% of their GDP annually in the public sector, significantly more than the UK.
This shortfall has tangible impacts on the economy and public services, with UK labor productivity growing at just 0.4% annually post-financial crisis—half the rate of the top 25 OECD countries. Swinney will emphasize that solutions like building more houses, creating green jobs, and investing in infrastructure are well-known but underutilized.
He will call for the UK Budget to change borrowing rules to facilitate greater public infrastructure investment, aiming for public sector investment to reach at least 3% of GDP, with aspirations to match the OECD average of 3.7%. The First Minister will also press for increased public expenditure in the upcoming budget, describing the past seven years as a “long, dark economic winter.”
He believes this budget represents a critical moment for UK policy-making amidst ongoing global challenges.
A Treasury spokesperson responded by highlighting efforts to boost investment through planning reforms and a new National Wealth Fund, noting a record-breaking £63 billion in investment commitments from an International Investment Summit.
