Conclusions & Focus of Future Research
First attempt at system-wide analysis of Barnett formula:
- we find adverse impact on Scottish economy relative to that of England - and “up-dating” of population weights (Darling amendment) makes matters worse
- though scale of adverse effects is sensitive to migration and wage bargaining behaviour
- “Needs equilibrium” significantly less adverse impact? - but do not have estimates of current needs
Four main areas for further Barnett-related research within our ESRC project:
- extend analysis beyond “Barnett equilibria”
- investigate implications of allowing for possible “supply side” impact effects of formula-driven expenditures
- develop explicit interregional analysis for UK, and explore the impact of Barnett on levels of economic activity in each of England, Scotland, Wales and Northern Ireland
- explore the impact of alternatives to Barnett – and simulate the effects of alternative fiscal arrangements
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Finally, worth noting:
- macroeconomic effects of Barnett may be significant, but
- conventional “needs assessment” exercises would not recognise such effects