A vague wish-list of uncosted aspirations.
That's how an economist is describing the Scottish Govenment's White Paper on independence.
Ewen Stewart was commissioned by the pro-union think-tank the Scottish Research Society to analyse the cost of implementing measures in the White Paper.
Using the Scottish Government’s own annual-deficit projections, Ewen Stewart has concluded that if Scotland rejoined the EU and had to comply with its compulsory annual borrowing limit, every household in Scotland would be worse off by £3,400-£5,500 a year, plus another £500-£1,000 a year for every £100,000 borrowed on their mortgage.
North Sea oil revenues can no longer be our economic saviour - revenues are falling and costs of exploration and extraction are rising. This is evidenced by the recent decision of the Office for Budget Responsibility (OBR) to downgrade its long-term North Sea oil tax projections by a massive £21 billion. Since 2000, North Sea oil production has fallen by two-thirds from 4.5million barrels a day to 1.5million barrels a day.
Other key points that Ewen Stewart raises:
Scotland's public sector is over 50% GDP, five percent higher than UK average. Spending is £1,267 a head higher than UK. An independent Scotland, dependent on a highly cyclical oil sector cannot maintain this. Either spending is cut, or taxes rise, or both.
An independent Scotland would take on a national debt of £116billion, rising to £186billion including bank liabilities.
In 2012/13, an independent Scotland’s deficit would have been up to £17.1billion, or £3,226 per head.
The assets of Scottish banks are 12 times GDP, dwarfing those of Iceland and Ireland in 2008. Independent, without the support of the Bank of England, they would be forced to migrate to London or shrink their balance sheets. Neither is good for jobs.
The economic crash of 2008 would have bankrupted Scotland if it had been independent at that time.
Seventy percent of Scotland’s trade, accounting for almost 40% of Scotland’s GDP, is with the rest of the UK.
An independent Scotland would rely on state spending, volatile and declining oil resources, and a disproportionally large financial sector in Scotland, making it one of the most unstable economies in Europe. Within the UK, Scotland benefits from the support of a larger, more diversified economy and the balance sheet of the UK treasury.
Mr Stewart says, “The Scottish Government’s white paper, Scotland’s Future, is not a programme for a new nation. It is a vague wish-list of uncosted aspirations. Ironically theScottish Government's proposals risk the very things they are trying to protect including employment, public spending and the maintenance of sterling as the country’s currency, which is the only credible option available. An independent Scotland’s economy would still be heavily dependent on the UK and if Scotland were to be allowed to retain the pound, it would have no influence over monetary policy. In the ‘independence’ vote, independence is the one option not on offer.”
He'll brief MSPs on his findings later:
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