Impact of COVID-19 on Public Finances and the Fiscal Framework

The RSE has submitted a response to an inquiry into the ‘Impact of COVID-19 on Public Finances and the Fiscal Framework’ from the Scottish Parliament Finance and Constitution Committee.

The response analyses the potential short and medium-term impacts from the pandemic and subsequent government interventions on public finances, and what government will need to consider in response. Additionally, the response examines the suitability of the fiscal framework in a time of crisis, before presenting concluding thoughts on what the RSE believe should be the key priorities and actions for government.

Paper Summary

The Royal Society of Edinburgh (RSE), Scotland’s National Academy, welcomes the inquiry by the Scottish Parliament Finance and Constitution Committee into the impact of COVID-19 on the public finances and fiscal framework. Since 1783 our core mission has remained the same, the advancement of learning and useful knowledge; our work is underpinned by two principles, a broad understanding of knowledge and application of that knowledge for the public good – which translates into knowledge made useful.

As Scotland addresses the significant challenges posed by COVID-19 and begins to recover towards a “new normal”, the RSE, harnessing our multidisciplinary Fellowship and using our convening power, is well placed to provide evidence-based advice and support to government and parliament. Our work in this area will be led by our Post-Covid-19 Futures Commission which brings together leading thinkers and practitioners from across academia, business, public service and the creative arts. The Commission will help identify and address some of the immediate policy implications and challenges arising from the coronavirus outbreak and support thinking around the longer-term questions it raises.

We appreciate the urgency around the inquiry given the imminent publication of the Scottish Government’s Summer Budget Revision as a consequence of the outbreak of COVID-19, which we note was published on 27 May.

Given the short timeframe, this response provides an overview of what the RSE believes to be the key impacts on and considerations for the future of public finances and the economic recovery. This response was facilitated through a short life working group of RSE Fellows with expertise and experience in economics, public finance, local government, inter-governmental relations and constitutional law.