Between the time this speech was delivered and the time of publication, there have inevitably been developments in the UK economy. Perhaps the most surprising of these has been a marked improvement in the UK's growth performance in the past 2 or 3 quarters. Recent growth of GDP has exceeded the author's expectations. More remarkably this growth has been primarily based upon increased consumer expenditure. As anticipated in the talk consumer incomes have fallen in real terms, so the higher than expected increase in consumption has come despite that real income decline. In part this has been related to a more buoyant than expected housing market, especially in southern England. The private housing market has been deliberately stimulated by Government interventions.

This consumption growth must also be associated with increased consumer debt - at a time when the priority should still be on reducing such debt (which remains a cause for concern) alongside a tightening of the public finances. The Chancellor of the Exchequer recently announced that £25 billion of further tightening will be required in the two years after the 2015 UK general election; and that most of this is likely to come from reductions in welfare expenditure. Such pronouncements, along with a continuing refusal to contemplate tax increases as a significant element of the fiscal tightening regime, suggest that divisions on policy related to social inequalities can be added to the web of complexities to be dealt with in the years ahead.

Meantime performance in Scotland and the UK as a whole on both exports and private investment has continued to disappoint. Productivity improvements have been limited. Given these disappointing trends and the undue reliance for growth on the over-stretched consumer, the recent above expectations GDP growth is not sustainable. The problems identified in the talk remain to be tackled and no ‘easy way out’ has been uncovered. The outlook remains one of relatively low growth (compared to the boom years) and learning to cope with tight public finances, demographic shifts and escalating environmental and social concerns. This applies in the UK and in any future constitutional regime for Scotland.