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Business Environment

Volume 450: debated on Tuesday 10 October 2006

This Government’s strong macro-economic policies have delivered the strongest Scottish labour market in decades, with record levels of employment. The Government's monetary policy framework has delivered the longest period of sustained low and stable inflation since the 1960s.

I am sure that my right hon. Friend will be aware of recent research that shows that the success of the Nordic countries is, above all, due to their long-term political and economic stability. Does he agree that that is what Scotland needs as well, and will he ensure that he resists the calls of those who would jeopardise tens of thousands of Scottish jobs by plunging us into years of constitutional uncertainty and chaos?

I find myself in full agreement with the hon. Gentleman and I pray in support not simply the research carried out by the Government, but the most recent headlines in Scotland. Only yesterday, on 9 October, The Scotsman led with the headline:

“Scottish output growth fastest in 6 years”.

The Herald led with the headline: “Scotland’s economy going strong”. Of particular significance in that story was a quote from Andrew Wilson, the deputy chief economist of the Royal Bank of Scotland, who said:

“Solid result. Good news for manufacturers generally.”

Clearly, the consensus that the Scottish economy is strong and strengthening extends even to those who previously belonged to other parties.

What assessment has the Secretary of State made of the relative economic success of the Republic of Ireland, with its low corporate tax rates? Is that not a lesson that the Scottish economy would find hugely advantageous—if corporate tax rates in Scotland were cut to the level of those in the Republic of Ireland?

The hon. Gentleman may have forgotten that corporation tax has already been cut by this Government. His point about Ireland has to be taken somewhat cautiously. If we look, for example, at the competitiveness of western Europe in computing and IT, there was a time over the past 20 years when we could secure what is inherently mobile international capital investment by having reduced rates of corporation tax. That level of investment in Ireland preceded the rise of not just China, but India, Vietnam and other economies in the far east. The economic restructuring that has taken place in recent years suggests that there is no single silver magic bullet. The determination to provide the economic stability that we have provided, together with education and training, also has a key role to play.