Friday, 27 January 2017

Hail Mary

Hail Mary

I've no idea if the "Hail Mary" play is still a thing in American Football, I only know it from my days playing a game on my ZX spectrum where you could call the plays for the team. The Hail Mary (or "Bomb" in the game) was the last desperate play of a game. You throw all caution to the wind, push all your players into the end zone and throw the ball as far as you can, praying (hence the name) one of your own team will catch it.

It's desperate and dramatic, but hey when you are down you might as well go out with a bang rather than a whimper.

I witnessed a Hail Mary on Wednesday on STV. Kevin Hague (a successful businessman, entrepreneur and unionist blogger) was debating with Gordon MacIntyre-Kemp (the CEO of a social media agency and "Business" for Scotland). You can watch the full clip here or the youtube version here.

Kemp versus Hague

I won't go into the debate itself, Kevin was measured and got the essential unionist point over - if we have to choose between the U.K. and EU markets surely we want to be on the side of the trade barrier that covers our biggest actual market?

Kemp on the other hand was all over the place. Initially arguing that Scotland's ills were all due to the strength of the Pound hurting our exports and that this was all down to the UK pandering to the financial services industry.

This in itself doesn't make a lot of sense:

1 Kemp passionately argued for a currency union at the independence referendum - here's a video of him (wrongly) saying why it would have happened. So why then did he want to hurt Scotland by tying the newly independent state to a currency that was too high? When did Kemp change his mind on this and why?

2 A significant proportion of Scotland's exports are services (and financial services at that). The financial services industry is the biggest onshore industry in Scotland. Why then did Kemp think it would be a good idea to attack it?

3 Kemp is effectively arguing that Scotland needs a new currency to develop its economy (clearly he's got the SNP memo on the policy shift) the trouble is he's just argued that the new currency needs to devalue against Sterling. That means inflation, interest rates and mortgage costs go up (no matter how they are denominated) and the cost of our sovereign debt payments to the continuing UK go up putting even more pressure on Scottish finances and its deficit.

All in all it's not exactly a tempting prospectus, but let's get back to the Hail Mary.

Spinning things you don't understand 
If you watch the last few moments of the exchange you can see the comical attempt to throw the Hail Mary by a beleaguered Kemp having swung back and forward about a hard and soft Brexit.  Rona Dougall was set to move on and Kemp obviously realizes that he's not remotely got any of his points over and throws in a hastily worded summary of his solution.

"I think that the EU will look at financial passporting which will hurt the the City of London and potentially create tens of thousands of jobs in Scotland."

So the future for Scotland was bright because financial firms would leave the City of London (after losing financial passporting) and relocate to a Scotland within the EU?

This shows that Kemp really doesn't understand finance which remains the soft underbelly of the nationalist movement. Indeed I've heard this line before on social media where it was clearly getting road tested by some nationalists. I'm just surprised that "Business" for Scotland thought it was a road worthy argument!

A Hail Mary into a wall

The trouble is that Kemp's point doesn't remotely make any sense. So let's unpack the assertion.

Firstly Kemp just attacked financial services in his opening statement, but by the end of the section it's the solution to all of Scotland's problems. Two contradictory statements within 5 minutes of one another is not a good start.

Secondly it's highly unlikely that the EU would kill off financial passporting as it would hinder EU member's access to one of the biggest capital markets in the globe. 

More importantly though if you are a financial services company in the City of London looking to secure access to the EU what would make you consider relocating to Scotland?

You've just been forced to relocate because the member state you were in has left the EU. You therefore need to move to a state that is committed to the EU, so why on earth would you pick Scotland?

Scotland will be at best a semi-detached member of the EU. It would be out of the Euro,(we've already been told all of these things by the SNP) and would be practically unable to join the Fiscal Pact. It would be out of Schengen and it would have a sizable chunk of the population in favour of leaving the EU.

Scotland would be facing a substantial deficit which would require difficult tax choices, it would have a new devaluing currency (according to Kemp) and would have an uncertain political outlook (after all who knows what Scottish politics would look like after independence).

Furthermore Scotland would also be likely experiencing significant capital flight (as we saw during the independence referendum) and an exodus of large parts of the existing financial services operations (head offices at least) as they are forced to relocate into their main (rUK) markets. This would not be a friendly or positive environment for financial services companies.

Why then would a financial services company relocate to Scotland? 

The truth is they wouldn't. For the purposes of EU access Paris or Dublin would offer everything that such an organization would looking for and indeed Dublin would come with the sweetener of exceptionally low corporation tax.

The state of us

What is remarkable is that this is the "Business" for Scotland Hail Mary play. It contradicts their own 'High Sterling' outlook and that of the nationalist Tory bashing agenda. It makes no sense to anyone with a remote level of knowledge of the financial services industry, but maybe that's all that Kemp was hoping for.

In the post truth world it's not about having a coherent argument, it's just about having something to say. No matter how ridiculous, as long as you can say something in the debate hopefully your core supporters will believe it.

Fair enough, but that's a core vote strategy and it's a reflection of the state of the nationalist movement at the moment. SNP Front groups like "Business" for Scotland don't help the nationalist "woo" agenda, they just help to keep the "useful idiots" on the boil.

The SNP need to do some serious reaching out and thinking if they want to develop an open, honest and coherent case for independence. 

Their growth commission was a great opportunity to do that, sadly the membership focused inward on the nationalist 'tribe' and not outwards to try to come up with a broader consensus on the economy of Scotland. It just goes to show the depressing state of Scottish politics at the moment. 

We can be so much better than this and so can the nationalist movement. It should start by looking at its team sheet because Kemp can't represent Scottish business, he clearly doesn't understand what he's talking when it comes to our most important onshore industry about and isn't helping the cause.


  1. Like Mr Kemp I often have problems understanding financial issues relating to the Independence debate. At the moment I am struggling with the issue of balance of payments. I realise that this has little to do with your "Hail Mary" article but I don't know how else to contact you. I am not on Twitter. Apologies in advance.
    The Indy Ref 2 organisation has recently pointed out that Scotland has a balance of payments surplus while the rest of the UK has a balance of payments deficit. This seems to be backed up by UK government statistics. I would be most grateful if you could answer the following questions.
    Is this information correct? If so, is this a weakness in the argument for keeping Scotland as part of the UK?

    1. Thanks. Scotland has a trade deficit with the rest of the U.K. That would put negative pressure on any new Scottish currency, therefore it's not a positive for the case for independence.

  2. The public debate really has not caught up with the consequences of Yes's new currency policy (whatever it is they settle on).

    Once people realise that the new Scottish Pound will trade at a discount to Sterling due to being new, untested, Scotland not having creditworthiness and the trade deficit with rUK and that their mortgages and liabilities will remain in Stirling and increase in value it will be the death of the next Yes campaign.

    Also, if they want Scotland to have it's own currency they will have to be rather more careful not to publically threaten to default on Scotland's share of the UK national debt.

  3. The thing that really got my goat about this was the nonsense pedalled about Margaret Thatcher's use of interest rates. They were, of course, jacked up in order to curb inflation, after successive governments' prices and incomes policies had failed spectacularly, ultimately plunging the country into anarchy in 78/79. The fact that interviewers in Scotland let people off the hook with this type of trash tells us all we need to know about the media here: most simply don't have a clue about economics or economic history. It would have been interesting to see how Andrew Neil would have dealt with the guy's claims.

  4. For your consideration.