Tuesday, 26 November 2013

Scottish Independence

So today the SNP released its white paper laying out its plans for an independent Scotland. With Scots due to vote in less than a year, the race is now on to persuade voters.
Economically, the SNP has traditionally pointed out that most oil and gas reserves in the North Sea would belong to an independent Scotland. These resources are finite though, and if Iranian oil comes back to the market after this nuclear deal, prices will fall and the Scots oil and gas reserves will support them even less. 
Another problem is that really important things like Scottish EU membership or whether Scotland keeps the pound won't be negotiated until after the election. These issues will really affect the Scottish economy, so I don't see how Scots can decide without that sort of information.
Scotland also spends more per person on health and education than the rest of us south of the border, independence would mean the loss of tax revenue from the the UK. The Treasury estimates that Scottish taxes would have to be raised by £1000 per head to support their current systems. 
Also, as Scotland has banks like RBS and HBOS (part of the UK's Lloyds), it seems very unlikely to me that the Scottish economy could have bailed out banks of that size. It's crazy for Scotland to have a banking sector that big. The UK as a whole currently has a banking sector almost 5 times the size of GDP. Were Scotland to go independent, its banking sector would be more than 12.5 times bigger than its economy. Think of the banking crisis that destroyed Cyprus' economy in March. Pretty bad? Cyprus' banking sector was 700% of GDP. That's more than 500% smaller compared to the banks the Scottish economy would have. Crazy, eh?
Here's the last thing I'm going to say. I live within 1 hour of the border (on the English side, of course!). As it is, the UK is in danger of losing what global presence it has left, especially in Europe, which is becoming more and more dominated by the Eurozone. Independence would destroy this for Scotland and the UK. Together, the UK with Scotland part of it, we still have a bit of influence. Apart, it looks to me that we'll lose European control to the French and Germans, Scotland will lose loads of tax revenue, we'll lose loads of oil, gas and other resources we need. We'll all look a lot more miserable.

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