Tuesday, April 14, 2015

Scotland's new drunk driving law is dampening its economic growth

Talisker 18 year old single malt whiskyScots aren't drinking enough. They're drinking so little, in fact, that they're harming their economy.

A new drunk driving law explained here — came into effect last December 5. Under this new law, Scotland lowered its blood alcohol content limit from 0.08 (like the rest of the U.K.) to 0.05. Men will likely meet the new BAC limit with a single pint of beer, and women with only half a pint. The new limit works effectively as a ban on driving with any alcohol in a driver's system, and can come into play even on the morning after drinking.

In lowering its BAC limit, Scotland has fallen into line with the vast majority of European nations. Scotland's penalties, however, are more severe and a bit less nuanced than many of those nations. There's no distinction made between a BAC of 0.05 and a BAC of 0.10, or 0.15, or 0.20. If you hit the 0.05 mark after a single pint, you're treated the same as someone falling down drunk.

Not surprisingly, the new limit has made people more reluctant to have a drink when they're out, whether at a pub, restaurant, sporting event, or otherwise. It certainly has reined me in from having a single pint or glass of wine on many of the occasions when we've gone out to dinner.

Undoubtedly, the new law has improved road safety. While Scottish police found a total of 434 drink-drivers (as they're called here) over Christmas and Hogmanay in 2013-14, they found just 351 during the same period this past holiday season, right after passage of the new law. That's a 19% drop from the previous year. Granted, only 20 of those 351 (i.e., 6%) actually ran afoul of the new lower BAC limit. Still, the new law had an impact.

The secondary effect of the new law, though, has been an economic sucker punch. Survey results in February of 400 alcohol-licensed establishments, including bars, restaurants, golf clubs, and hotels, found that sales decreased by 10% to as much as 60% in the first two months after the new limit's introduction.

A leading Scottish economist this week published a report stating that Scotland's economic growth has been dampened by the new drunk driving law. Relying on a purchasing managers index (PMI), the economist noted the hospitality sector had suffered a marked decrease in spending. Although employment rose, new business increased, and oil prices recovered 20% from their recent lows, those factors were held in check by the diminished spending caused by the new drunk driving law.

Without a doubt, the hospitality sector in Scotland has taken a strong hit. Scots are a people with an historically strong attachment to their alcohol, particularly whisky. A severe drop in consumption like this indicates a potentially pivotal shift, at least for public behavior.

But spending on food and drink at pubs and restaurants is, by definition, leisure spending. And economically speaking, it's unlikely that leisure spending will be suddenly converted to savings. Rather, if the Scots don't spend their money on alcohol, they're likely going to direct their spending toward some other leisure activity. The focus of their spending might shift, but the amount of economic consumption should remain roughly the same. The Scottish economy might undergo a short-term blip in spending, which may redistribute itself to other areas in the future.

I think.

All that said, I'm feeling the need to do my civic duty to help Scotland's economy. Raise a pint, throw back a dram. Might be time for a new food regimen:

                    "I'm on a whisky diet. I've lost three days already." Tommy Cooper (British comedian)

Indeed, I'll have to drink enough for two people. Kate's driving.

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