Carlos Alba, managing director of Carlos Alba Media
In preparing his Autumn Statement the Chancellor, George Osborne, might wish to reflect on Albert Einstein’s definition of madness - the act of doing the same thing over and over again and expecting different results.
Then again, those of his critics who have pressed him repeatedly to change course on the economy over the past two-and-a-half years, without making any impact on his thinking, may also want to consider Einstein’s maxim.
Whatever decisions the Chancellor announces next Wednesday will resonate loudest in Scotland where unemployment is higher than in the rest of the UK (8.1 per cent compared with 7.8 per cent) and growth lower (zero per cent versus 0.4 per cent) at the last count.
With the Chancellor expected to miss his borrowing target by £13 billion this year and with the economy flatlining, he is required to act decisively and my bold prediction is that he will – not by loosening his grip on the Treasury purse strings, which might help to stimulate growth and lessen borrowing, but by abandoning one of his two key fiscal targets, that debt should be falling by 2015–16.
He may also announce further spending cuts or tax increases for the next parliament in order to continue to meet his other fiscal target - that debt should be falling as a share of GDP in 2015-16.
With further bad news expected from the Office for Budget Responsibility (OBR) next week, it is likely public sector pay rises will continue to be capped at one per cent for longer than expected and the number of public sector jobs projected to be lost across the UK by 2017 may also be revised up from the current 710,000.
This, again, will be felt keenest north of the border where a higher proportion of the working population is employed by the state.
Despite what most businesses in Scotland may wish for, the most likely headline next Wednesday will be that the era of austerity in which we are floundering will last at least until 2017-18, three years longer than the coalition Government had originally planned.
None of this will ring sweetly north of the border where Alex Salmond, the first minister, wants the Chancellor to commit an additional £5 billion in capital investment across the UK (£400 million here), in construction, skills and the green economy, alongside an additional £40 million for affordable housing in Scotland.
His finance minister, John Swinney, is more ambitious, suggesting an additional £800 million for projects over the next 18 months, including £63.4 million for Clyde Gateway, £11 million to upgrade the A68 Pathhead to Tynehead Junction, £7 million to NHS Grampian for work on Inverurie Health Centre and Community Maternity Unit , £119 million for Port of Leith master-planning and £65 million for targeted investment in Scottish colleges.
CBI Scotland, which last year congratulated the Chancellor on continuing to pursue a “tough programme of fiscal consolidation” to halt “ballooning national debt and higher interest payments that come with it”, also believes he must do more to drive growth.
It wants him to use last year’s £7.8 billion underspend and a £4 billion windfall expected from next year’s 4G spectrum auction to target “short-term, high-impact” measures across the UK to support growth.
Having long ago eschewed a flexible fiscal policy that would have allowed him to cushion the UK from the worst effects of the euro disintegration, a weak American recovery the easing off of the Asian economic boom, Osborne is like a poker player left holding a duff hand after having raised.
He now finds himself running out of options and in the absurd position of imposing the kind of measures least likely to encourage growth.
Primary responsibility for steering the economy out of its slump now lies with the Bank of England and its new Canadian Governor Mark Carney – but it has already ruled out further use of its single most effective tool, quantative easing, for fear of further driving up inflation.
Rather than welcoming lower employer taxes and investment in infrastructural projects next Wednesday, we can instead look forward to a further £11billion worth of cuts, principally in welfare and perhaps a tax rise or two.
The Chancellor may throw in a crowd pleaser with a tax on property or by removing tax relief for wealthy Britons' pension contributions.
Such a move would be popular with the Liberal Democrats, the junior partners in the coalition, but wouldn’t save much money.
The best Scottish businesses can hope for is a promise to postpone the planned rise in fuel duty in the New Year and perhaps, though not likely, full devolution of air passenger duty to the Scottish Parliament.
What would be particularly welcome, without any immediate cost, would be for the Chancellor to provide long term clarity on the Government’s commitment to renewables to consolidate one of Scotland’s most important, emerging industries.
Despite the recently published Energy Bill, which will allow energy firms to increase the "green" levy from £3bn to £7.6bn-a-year by 2020, critics are not convinced ministers are doing enough to remove uncertainty from the industry.
By allowing energy companies to charge more, the government hopes they will have the confidence to invest the large amounts of cash needed to build renewable energy infrastructure such as wind farms.
However investment in renewable energy had fallen under the coalition and, with the future of feed-in-tariffs unclear and mixed messages coming from ministers on further development of wind energy, some firms have put investment on hold, or scrapped it altogether.
The UK may be hobbling out of the worst recession in half a century like a wounded soldier, but there is little sign that Chancellor George will do much beyond sticking to the same treatment and hoping for a miraculous recovery.
Carlos Alba is the managing director of Carlos Alba Media