Archives for November 24, 2008

Well, the Stock Market likes what Alistair Darling had to say this afternoon - so far.

So might small and medium-sized businesses.

The reckoning is that there's £7bn of support coming their way, out of this £20bn fiscal package.

There's a new loan fund, loan guarantee extensions, delays in tax bills for those in cash flow trouble, and more flexibility in writing off losses against tax.

But note how little of this package is in new spending.

It's very heavily loaded towards tax cuts, and the change in the UK Government's spending plan is almost entirely to bring spending forward from 2010-11 to next year.

The Scottish Government had already planned something similar for housing.

That means very little to boost Holyrood spending plans - just a few million pounds might come north to help with home insulation.

That isn't much of an answer to Alex Salmond's claim that the Scottish Government should get nearly £1bn in grant for extra spending to help the economy.

On the contrary, there is a squeeze on the public sector, with more efficiency expected particularly when the bills have to be paid in future years.

The argument is that government has to share some of the pain.

And in the Scottish public sector, that could mean the current 2% per year efficiency requirement could be pushed up to 3%, when it is already causing squeals of pain from councils and health boards.

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Alistair Darling is delivering A Very Important Statement.

This is not just any pre-Budget report. This isn't even any old Budget day.

This is more of a battle plan as Britain moves onto an economic war footing.

The idea is that we are supposed to do our patriotic duty by going out and spending lots in the shops.

Let's gloss over the fact that we have been doing that rather too enthusiastically for rather too long.

Saving for your retirement, or even a rainy day? Forget it.

This IS a rainy day unlike any other. It's not just drizzle we're talking, but a major storm brewing off the British coast.

One of the risks of a big fiscal stimulus is that people take their tax cuts and extra spending power and spend that on sucking in imports.

That can as easily mean a foreign holiday as an imported laptop, car or a whole lot of Chinese-made toys for the kids' Christmas.

And money spent on imports is money lost to the British economy, so the multiplier effect of that cash swirling round the economy goes to help some other country.

That is why Gordon Brown was careful to give himself political cover for his fiscal stimulus, with the Washington summit agreement for other countries to do likewise.

As well as Alistair Darling's statement, we're finding out today about the possible scale of the American boost - 700 billion dollar seems the same nice, round figure used for the buy-out of toxic debt approved by Congress in early October.

The idea is to get everyone boosting their economies at roughly the same rate, so that leakage to imports is minimised, or at least so that we gain from others' spending programmes through our exports.

That's where Jim McColl comes in, as boss of Clyde Blowers.

Just before he headed off to the US and South Africa last week, to work on integrating new subsidiaries of his Scottish-based company, he was announcing a giant new order from China, to supply pumps for several new nuclear power stations.

The Beijing Government is going for a humungous fiscal stimulus of 4 trillian yuan, which converts at roughly £400 billion.

And by bringing forward its vast programme in building energy plants, that means good news for those with the technology at Weir Pumps' Cathcart works, in Glasgow.

Parent company Clyde Blowers, says Jim McColl, is now positioned as the world's biggest provider of pumps to the nuclear power industry.

McColl remains assertively upbeat about prospects, which puts him in a very small minority these days.

His advice to others in Scottish business: stop looking at your shoes, look up and for new opportunities.

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