Buses and other EU aid for Ukraine
We are now in a position where the leadership of the Scottish Labour Party, the SNP and the Liberal Democrats, think that we need to, at the very least, deepen our relationship with the EU and increase spending on defence. It is critical that the Scottish left takes these arguments on. Posed as a remedy to our economic ills and a means to keep us safe, they are neither. In fact they may well accelerate economic decline and help sustain illusions of post imperial glory.
Defence
According to the House of Commons library, the 2025 Spending Review puts defence spending at £62.2 billion in 2025/26, increasing to £73.5 billion in 2028/29. This is equivalent to an annual average real-terms growth rate of 3.8% over this period.[i] To give that some perspective, the combined Scottish Parliament budget for Health and Social Care, Finance and Local Government, Social Justice, Education and Skills, Justice and Home Affairs and Transport is £63 billion.
The big party consensus in favour of increased defence expenditure includes Andy Burnham, potentially the next leader of the Labour Party. Although, he has at least suggested that defence spending could be excluded from the fiscal rules allowing ministers to increase military spending by borrowing more, without cutting welfare.
Why the rush to increase defence spending? We are offered two broad reasons. Firstly, we are told that there is an increased threat level, primarily from Russia and secondly that spending on defence will help spark the growth we desperately need to shake the UK and Scottish economies out of the economic torpor that has increasingly taken a grip, most recently since the 2007 financial crisis, although economic decline is the long-term trajectory of the British economy.
In addition, there has been a crescendo of criticism of the decision to leave the EU in 2016 and increasing pressure to “get closer” to or even to rejoin it.[ii]
What has not been considered, is what such a move would mean for addressing a socialist solution for our current economic mess.
What is the threat?
Let’s start by looking at defence spending. The identified threat is from Russia, which is accused of starting a war against Ukraine entirely unprovoked as part of a Russian imperialist plan to dominate Eastern Europe.
What, of course, NATO members, including Britain, do not dwell on is that they knew the eastward expansion of NATO would provoke Russia. In April this year Declassified UK published this: “The British files for 1995-99, available at the National Archives in London, show that Russia repeatedly warned the West about eastern European countries, including Ukraine, joining Nato.”[iii]
The report goes on to discuss the period after the election of Tony Blair: “One reason for Moscow’s opposition to enlargement at this time was Blair’s war in Kosovo in 1999, which involved bombing Serbia Moscow’s ally, and expanding Western influence in eastern Europe after failing to secure UN security council authorisation…However, it wasn’t just Kosovo, but US/UK policies towards Iraq, and their bombing of the country in 1998, also without UN authorisation, that angered Russia.”
NATO’s leaders also conveniently forget the 2014 Maidan coup against the Russian leaning president of Ukraine, Yanukovitch, which provoked the revolt in the Donbass and the beginning of armed conflict, with Russia initially acting covertly until the full-blown invasion of 2022. While none of NATO’s aggression justifies the illegal Russian invasion of the whole of Ukraine, it undermines the story endlessly peddled by NATO, at least until Trump, that Russia is inherently malign and will only ever act in ways hostile to its European neighbours.
If Britain and the other NATO members were serious about reducing the threat from Russia, they would support a peace deal between Ukraine and Russia including a new defence architecture for Europe that would offer Russia the guarantees of non-aggression and economic inclusion that it clearly seeks. (See War in Ukraine by Benjamin and Davies, OR publications).
Defence and economic growth
And as for the Defence sector providing the basis of economic growth, the CND’s Alternative Defence Review[iv] demolishes this argument pointing out: that military spending has one of the lowest ‘employment multipliers’ - the capacity to create jobs - of all economic categories; that defence employment is highly concentrated in specific regions as opposed to evenly spread across the UK. 31.1 percent is in the north-west of England, for example; that it is highly concentrated in a relatively small number of large firms with small and medium enterprises securing only 5 percent of orders; that because many of the defence industry’s employees are bound by regulations that require secrecy, innovation through knowledge sharing is near to impossible.
Losing control of our economy
The other solution being urged by SNP, Liberal and Labour leaders or wannabe leaders to our economic crisis, is a return to the warm embrace of the EU, either after a prolonged courtship – the Burnham solution or a faster, shotgun wedding - Wes Streeting’s preferred option.
Would our profound economic malaise be cured by a return to the EU, an organisation which was and is, incidentally, umbilically linked to the NATO alliance. Trump has questioned whether the US is getting value for money, further fuelling the fire for increased defence expenditure among EU states, but a more profound rift seems to have been avoided. Aside from its toxic relationship with NATO, economically, rejoining the EU is more likely to be a cure that is worse than the disease.
One of the main causes of our economic sclerosis has been understood on the Left for some time. Fifty-one years ago, the 1975 Red Paper on Scotland edited by Gordon Brown argued that Scotland’s economy was
“…one akin to that of a colony, i.e. one with a high level of external control, absentee decision makers and subsidiary technology.’”
Since then, it has got worse. After decades of de-industrialisation, following the victory of Thatcherism we had the 2007 economic crisis. This was “resolved” in the major capitalist countries by state intervention to bail out the banks that had caused the crisis, leading to a massive expansion of public debt and then in 2010 the Conservative/Lib Dem coalition imposed austerity in order to deal with that debt while blaming “unaffordable” public expenditure under the previous Labour government.
Meanwhile multinationals, mainly from the United States, Europe and Japan expanded their control of global production chains while domestic productive capacity our ability to make things - in core capitalist countries - like Britain and Scotland, declined. In Keep left the Red Paper 2025, Richard Leonard points out as a consequence, that control of our economy by foreign owners has increased and that the creation of the Scottish parliament has had no significant impact on stopping this process.
Indeed, under the SNP, attracting foreign direct investment has remained a priority. This includes newer sectors like renewable energy. These too are dominated by multinationals whose headquarters are overseas. Furthermore, as the leasing of ScotWind demonstrates, if anything, the Scottish government is accelerating the sell off of Scottish energy assets to private corporations and overseas state-owned utilities.
Our manufacturing base still remains important to us but recently we have lost of the Petro-chemical plant at Grangemouth, we have seen the end of production at the Mossmorran chemical works in Fife and more recently still, we have had the announcement that the bus manufacturer Alexander Dennis is proposing to close its Falkirk plant with more jobs and their attendant skills lost.
In the words of Strathclyde University’s Fraser of Allender Institute: “The evolution of manufacturing in Scotland and the UK is characterised by broad decline and growing dependency on a few subsectors and on imported goods…Though it has not always been the case, manufacturing today contributes more significantly to the Scottish economy than it does to the UK’s. This speaks to the resilience of Scottish manufacturing, whereby the sector has an outsized influence on economic performance – especially in periods of volatility.”
Can the EU save us
And yet in Scotland the dominant “Social Democratic” parties, the SNP and Labour have allowed and continue to allow our manufacturing capacity to collapse or be bought over by multinationals who have no interest in Scotland or the Scottish people beyond the profits they can generate. We need democratic control of our economy. So would rejoining the EU help us in that?
The answer is no. Firstly, our capacity to borrow to invest would be limited by the EU’s deficit and debt fiscal rules set out in the so-called Stability and Growth Pact which enforces an annual deficit ratio of 3% to GDP and an overall debt ratio of 60% to GDP. At the moment, for example, the UK has a 4.2% deficit and a 94.2% debt almost certainly meaning that public expenditure would have to be cut, were we still in the EU.
These rules have contributed to the current economic decline of the EU. The former European Central Bank President Mario Draghi points out that Europe's economy has been in decline for decades, with stagnant productivity, falling investment and loss of market share. [v]
Add to that the shock of NATO’s proxy war with Russia over Ukraine and the impact that has had on cheap Russian energy supplies, especially to Germany, and you begin to understand why estimated GDP growth in EU countries is so poor, according to the IMF, [vi]from a "high" of 3.32% in Poland to 0.79% in Germany to 0.52% in Italy. [vii]
Secondly, while it is technically possible for a state within the EU to own an enterprise, that ownership can only be on the basis that the state behaves like a private enterprise company. State Aid rules generally forbid the use of subsidy, if that subsidy is not on the basis of a return for an investment that a private investor might make. The same kind of prescriptions apply to procurement. Were we in the EU we could not insist, for example, that publicly owned bus companies had to buy buses from a publicly owned Dennis Alexander. Any interventions made to support Alexander Dennis would be illegal if it were considered that a publicly owned enterprise was being given an advantage over other EU bus manufacturers.[viii]
Public control and public ownership
And yet, that is exactly the kind of intervention that we need to make in out economy if we are going to build an economy that is designed to support its people rather than our current model where our economy is structured to fill the coffers of global corporations. For as Commonweal points out Scotland is one of the most foreign-owned countries in the world. “Scotland has experienced a net outflow of wealth in every year since records began in 1998 – totalling around £277.4 billion between 1998 and 2021. Of this, £134.7 billion was extracted to the rest of the UK and £142.7 billion was extracted to the rest of the world.” [ix]
Scotland is in long term economic decline because, among other things, it has allowed large sections of its manufacturing base to be closed or be bought out by foreign capital. To try to address that by rejoining the EU would make the situation worse. It would limit our economic freedom through debt and deficit rules and limit our capacity to take control of Scottish assets. Nor would increased defence expenditure born out of NATO’s need to reinforce its capacity to impose Western capitalist imperialism on the rest of the globe help us grow our economy. It would be limited in its impact and wasteful given the desperate need we have for investment in our productive economy, rather than weapons that hopefully rust away in army warehouses. We need instead to take control of our economic destiny. We need public ownership, not just public control and we need it now.
This is an expanded version of a contribution given as part of the Scottish Morning Star Conference on 24th May at the STUC, Glasgow.
[i] https://commonslibrary.parliament.uk/research-briefings/cbp-8175/
[ii]https://leftfootforward.org/2026/05/what-have-andy-burnham-and-wes-streeting-said-about-rejoining-the-eu/
[iii] https://www.declassifieduk.org/nato-expansion-would-provoke-russians-uk-understood/
[iv] https://cnduk.org/adr/
[v] https://commission.europa.eu/topics/competitiveness/draghi-report_en
[vii]https://www.imf.org/en/publications/weo/issues/2026/04/14/world-economic-outlook-april-2026
[viii] https://competition-policy.ec.europa.eu/state-aid_en
[ix] https://www.commonweal.scot/policies/profit-extraction/
According to the House of Commons library, the 2025 Spending Review puts defence spending at £62.2 billion in 2025/26, increasing to £73.5 billion in 2028/29. This is equivalent to an annual average real-terms growth rate of 3.8% over this period.[i] To give that some perspective, the combined Scottish Parliament budget for Health and Social Care, Finance and Local Government, Social Justice, Education and Skills, Justice and Home Affairs and Transport is £63 billion.
The big party consensus in favour of increased defence expenditure includes Andy Burnham, potentially the next leader of the Labour Party. Although, he has at least suggested that defence spending could be excluded from the fiscal rules allowing ministers to increase military spending by borrowing more, without cutting welfare.
Why the rush to increase defence spending? We are offered two broad reasons. Firstly, we are told that there is an increased threat level, primarily from Russia and secondly that spending on defence will help spark the growth we desperately need to shake the UK and Scottish economies out of the economic torpor that has increasingly taken a grip, most recently since the 2007 financial crisis, although economic decline is the long-term trajectory of the British economy.
In addition, there has been a crescendo of criticism of the decision to leave the EU in 2016 and increasing pressure to “get closer” to or even to rejoin it.[ii]
What has not been considered, is what such a move would mean for addressing a socialist solution for our current economic mess.
What is the threat?
Let’s start by looking at defence spending. The identified threat is from Russia, which is accused of starting a war against Ukraine entirely unprovoked as part of a Russian imperialist plan to dominate Eastern Europe.
What, of course, NATO members, including Britain, do not dwell on is that they knew the eastward expansion of NATO would provoke Russia. In April this year Declassified UK published this: “The British files for 1995-99, available at the National Archives in London, show that Russia repeatedly warned the West about eastern European countries, including Ukraine, joining Nato.”[iii]
The report goes on to discuss the period after the election of Tony Blair: “One reason for Moscow’s opposition to enlargement at this time was Blair’s war in Kosovo in 1999, which involved bombing Serbia Moscow’s ally, and expanding Western influence in eastern Europe after failing to secure UN security council authorisation…However, it wasn’t just Kosovo, but US/UK policies towards Iraq, and their bombing of the country in 1998, also without UN authorisation, that angered Russia.”
NATO’s leaders also conveniently forget the 2014 Maidan coup against the Russian leaning president of Ukraine, Yanukovitch, which provoked the revolt in the Donbass and the beginning of armed conflict, with Russia initially acting covertly until the full-blown invasion of 2022. While none of NATO’s aggression justifies the illegal Russian invasion of the whole of Ukraine, it undermines the story endlessly peddled by NATO, at least until Trump, that Russia is inherently malign and will only ever act in ways hostile to its European neighbours.
If Britain and the other NATO members were serious about reducing the threat from Russia, they would support a peace deal between Ukraine and Russia including a new defence architecture for Europe that would offer Russia the guarantees of non-aggression and economic inclusion that it clearly seeks. (See War in Ukraine by Benjamin and Davies, OR publications).
Defence and economic growth
And as for the Defence sector providing the basis of economic growth, the CND’s Alternative Defence Review[iv] demolishes this argument pointing out: that military spending has one of the lowest ‘employment multipliers’ - the capacity to create jobs - of all economic categories; that defence employment is highly concentrated in specific regions as opposed to evenly spread across the UK. 31.1 percent is in the north-west of England, for example; that it is highly concentrated in a relatively small number of large firms with small and medium enterprises securing only 5 percent of orders; that because many of the defence industry’s employees are bound by regulations that require secrecy, innovation through knowledge sharing is near to impossible.
Losing control of our economy
The other solution being urged by SNP, Liberal and Labour leaders or wannabe leaders to our economic crisis, is a return to the warm embrace of the EU, either after a prolonged courtship – the Burnham solution or a faster, shotgun wedding - Wes Streeting’s preferred option.
Would our profound economic malaise be cured by a return to the EU, an organisation which was and is, incidentally, umbilically linked to the NATO alliance. Trump has questioned whether the US is getting value for money, further fuelling the fire for increased defence expenditure among EU states, but a more profound rift seems to have been avoided. Aside from its toxic relationship with NATO, economically, rejoining the EU is more likely to be a cure that is worse than the disease.
One of the main causes of our economic sclerosis has been understood on the Left for some time. Fifty-one years ago, the 1975 Red Paper on Scotland edited by Gordon Brown argued that Scotland’s economy was
“…one akin to that of a colony, i.e. one with a high level of external control, absentee decision makers and subsidiary technology.’”
Since then, it has got worse. After decades of de-industrialisation, following the victory of Thatcherism we had the 2007 economic crisis. This was “resolved” in the major capitalist countries by state intervention to bail out the banks that had caused the crisis, leading to a massive expansion of public debt and then in 2010 the Conservative/Lib Dem coalition imposed austerity in order to deal with that debt while blaming “unaffordable” public expenditure under the previous Labour government.
Meanwhile multinationals, mainly from the United States, Europe and Japan expanded their control of global production chains while domestic productive capacity our ability to make things - in core capitalist countries - like Britain and Scotland, declined. In Keep left the Red Paper 2025, Richard Leonard points out as a consequence, that control of our economy by foreign owners has increased and that the creation of the Scottish parliament has had no significant impact on stopping this process.
Indeed, under the SNP, attracting foreign direct investment has remained a priority. This includes newer sectors like renewable energy. These too are dominated by multinationals whose headquarters are overseas. Furthermore, as the leasing of ScotWind demonstrates, if anything, the Scottish government is accelerating the sell off of Scottish energy assets to private corporations and overseas state-owned utilities.
Our manufacturing base still remains important to us but recently we have lost of the Petro-chemical plant at Grangemouth, we have seen the end of production at the Mossmorran chemical works in Fife and more recently still, we have had the announcement that the bus manufacturer Alexander Dennis is proposing to close its Falkirk plant with more jobs and their attendant skills lost.
In the words of Strathclyde University’s Fraser of Allender Institute: “The evolution of manufacturing in Scotland and the UK is characterised by broad decline and growing dependency on a few subsectors and on imported goods…Though it has not always been the case, manufacturing today contributes more significantly to the Scottish economy than it does to the UK’s. This speaks to the resilience of Scottish manufacturing, whereby the sector has an outsized influence on economic performance – especially in periods of volatility.”
Can the EU save us
And yet in Scotland the dominant “Social Democratic” parties, the SNP and Labour have allowed and continue to allow our manufacturing capacity to collapse or be bought over by multinationals who have no interest in Scotland or the Scottish people beyond the profits they can generate. We need democratic control of our economy. So would rejoining the EU help us in that?
The answer is no. Firstly, our capacity to borrow to invest would be limited by the EU’s deficit and debt fiscal rules set out in the so-called Stability and Growth Pact which enforces an annual deficit ratio of 3% to GDP and an overall debt ratio of 60% to GDP. At the moment, for example, the UK has a 4.2% deficit and a 94.2% debt almost certainly meaning that public expenditure would have to be cut, were we still in the EU.
These rules have contributed to the current economic decline of the EU. The former European Central Bank President Mario Draghi points out that Europe's economy has been in decline for decades, with stagnant productivity, falling investment and loss of market share. [v]
Add to that the shock of NATO’s proxy war with Russia over Ukraine and the impact that has had on cheap Russian energy supplies, especially to Germany, and you begin to understand why estimated GDP growth in EU countries is so poor, according to the IMF, [vi]from a "high" of 3.32% in Poland to 0.79% in Germany to 0.52% in Italy. [vii]
Secondly, while it is technically possible for a state within the EU to own an enterprise, that ownership can only be on the basis that the state behaves like a private enterprise company. State Aid rules generally forbid the use of subsidy, if that subsidy is not on the basis of a return for an investment that a private investor might make. The same kind of prescriptions apply to procurement. Were we in the EU we could not insist, for example, that publicly owned bus companies had to buy buses from a publicly owned Dennis Alexander. Any interventions made to support Alexander Dennis would be illegal if it were considered that a publicly owned enterprise was being given an advantage over other EU bus manufacturers.[viii]
Public control and public ownership
And yet, that is exactly the kind of intervention that we need to make in out economy if we are going to build an economy that is designed to support its people rather than our current model where our economy is structured to fill the coffers of global corporations. For as Commonweal points out Scotland is one of the most foreign-owned countries in the world. “Scotland has experienced a net outflow of wealth in every year since records began in 1998 – totalling around £277.4 billion between 1998 and 2021. Of this, £134.7 billion was extracted to the rest of the UK and £142.7 billion was extracted to the rest of the world.” [ix]
Scotland is in long term economic decline because, among other things, it has allowed large sections of its manufacturing base to be closed or be bought out by foreign capital. To try to address that by rejoining the EU would make the situation worse. It would limit our economic freedom through debt and deficit rules and limit our capacity to take control of Scottish assets. Nor would increased defence expenditure born out of NATO’s need to reinforce its capacity to impose Western capitalist imperialism on the rest of the globe help us grow our economy. It would be limited in its impact and wasteful given the desperate need we have for investment in our productive economy, rather than weapons that hopefully rust away in army warehouses. We need instead to take control of our economic destiny. We need public ownership, not just public control and we need it now.
This is an expanded version of a contribution given as part of the Scottish Morning Star Conference on 24th May at the STUC, Glasgow.
[i] https://commonslibrary.parliament.uk/research-briefings/cbp-8175/
[ii]https://leftfootforward.org/2026/05/what-have-andy-burnham-and-wes-streeting-said-about-rejoining-the-eu/
[iii] https://www.declassifieduk.org/nato-expansion-would-provoke-russians-uk-understood/
[iv] https://cnduk.org/adr/
[v] https://commission.europa.eu/topics/competitiveness/draghi-report_en
[vii]https://www.imf.org/en/publications/weo/issues/2026/04/14/world-economic-outlook-april-2026
[viii] https://competition-policy.ec.europa.eu/state-aid_en
[ix] https://www.commonweal.scot/policies/profit-extraction/
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