Rachel Reeves<\/a>\u2019s proposals presented in her Mansion House speech in July, when she sought to encourage pension funds to invest more of their existing assets in what he called the real economy.\n<\/p>\n\n \u201cNot only do [those proposals] make good business sense for pension funds,\u201d he said, \u201cthey will demonstrate a level of commitment to growth in the economy and to the British public.\u201d\n<\/p>\n
\n That sounds comforting. But let\u2019s be clear about what it really means.\n<\/p>\n
\n Bailey was not suggesting new public investment. He was not arguing for the Government to spend directly on infrastructure, housing, or green transition projects, all of which we know we need. Nor was he talking about creating high-skilled jobs, which are also essential.\n<\/p>\n
\n He was simply saying pension funds, which are, in effect, vast private institutions managing other people\u2019s deferred wages, should move some of their money invested in shares around the world into the shares of UK companies.\n<\/p>\n
\n In short, he was calling for investment by pension funds in shares, but not in jobs, or in anything that might result in new real economic activity.\n<\/p>\n
\n What he was proposing might please the City and Edinburgh financial elite but it will do little for the real economy. Shuffling share portfolios from one place to another is not the same as creating new productive capacity. It changes who owns the assets, not what assets exist, and yet Bailey seems to think this is what really matters. He is sadly mistaken.\n<\/p>\n
\n ![]()
(Image: Newsquest)\n<\/p>\n
What he didn\u2019t say<\/p>\n
\n AT the same time, Bailey was also evasive. He did not mention that the Bank of England\u2019s own high interest rates have made borrowing for productive investment prohibitively expensive. He did not acknowledge that his policies of paying interest to commercial banks on funds effectively donated to them by the Treasury during the 2008 global financial crisis, and more recent Covid crisis, have transferred billions from the public purse to banks and bondholders.\n<\/p>\n
\n He did not talk about the impact of interest rates set too high by the Bank on households, whether they have mortgages or rent.\n<\/p>\n
\n He did not address the fact that public investment has collapsed, or that private investment has been weak for more than a decade, precisely because of government austerity, uncertainty and lack of strategy.\n<\/p>\n
\n And he certainly did not note that the Government itself \u2013 uniquely among UK economic actors \u2013 can create the money needed to invest in the future, if it chooses to do so.\n<\/p>\n
Scotland\u2019s opportunity \u2013 and its constraint<\/p>\n
\n SCOTLAND, as Bailey acknowledged, has extraordinary potential in renewable energy, research, and innovation. But to unlock it requires long-term, risk-taking investment, which is precisely the kind that markets rarely provide.\n<\/p>\n
\n That means public leadership is required. The Government must decide that a transition to clean energy, to good jobs, and to a sustainable economy is worth funding. It means having the courage to spend first, tax later, and accept that public money is the foundation of private prosperity.\n<\/p>\n
\n Bailey\u2019s speech avoided that truth because it lies outside his economic theology. In his world, the state \u201csets the framework,\u201d the market provides the magic, and patience will do the rest, except that they do not.\n<\/p>\n
\n But patience is not a strategy. Scotland has been patient for decades while productivity, wages and living standards have stagnated. What it does not need now is yet another hymn to the virtues of waiting, but a plan to invest in our collective future.\n<\/p>\n
\n That plan must start with the recognition that it is the Government, and not pension funds, that holds the real power to create money and direct it towards the public good.\n<\/p>\n
\n Until the Bank of England and the Treasury accept that reality, Scotland will continue to be offered fine words about innovation and optimism, and little or no real investment to make them happen.\n<\/p>\n
\n Better still, Scotland needs its own treasury and national bank to lead that process for it.<\/p>\n","protected":false},"excerpt":{"rendered":"It was a warm start, courteous, and, if I might say so, typically smarmy opening from Bailey. But…\n","protected":false},"author":2,"featured_media":495228,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5009],"tags":[748,4884,712,16,15],"class_list":{"0":"post-495227","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-scotland","8":"tag-britain","9":"tag-great-britain","10":"tag-scotland","11":"tag-uk","12":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115364934636492075","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/495227","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=495227"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/495227\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/495228"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=495227"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=495227"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=495227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}