On the Economic consequences of Scottish Independence

The vote next week is a decision for the people of Scotland.

If I lived there I would be casting a positive vote to keep the UK together because I believe that all four nations are stronger and better off as part of a common family.

There has been a certain amount of scaremongering on both sides - for example, there is no other way to describe the ridiculous nonsense which the SNP has put out about the NHS - but the irony of the economic arguments is that, while a well-run Scotland might well be economically successful, the economically illiterate plans of the SNP are a recipe for disappointment.

Three good articles today on the subject: a humorous and a serious commentary on the suggestion by RBS and others that they might move their HQs to England in the event of a "Yes" vote, and an article on the danger that Salmond's policies might drive away the business investment he would need.

Alistair Heath writes convincingly about what an independent Scotland would need to do to be economically successful, and argues  here that instead "Alex Salmond is chasing away the private sector firms he so desperately needs."

The Daily Mash has an extremely funny piece here about the fact that the Royal Bank of Scotland would move their HQ to England in the event of a "Yes" vote. But many a true word is spoken in jest.

I particularly commend, however, to anyone who is thinking about how to vote in the Indyref this article by Andrew Lilico, who is an Economist with Europe Economics, and Chairman of the IEA Shadow Monetary Policy Committee.

Andrew begins by pointing out that

"One of the most remarkable features of the Scottish independence debate has been the total disregard the Yes campaign has had for expert opinion."

Quite. He carries on ...

"When experts such as the Permanent Secretary to HM Treasury advised against a currency union with an independent Scotland, when all the main political parties said there would be no such currency union and when all the expert political and finance commentators said there was no way the UK government and political parties, having rejected joining the euro precisely because currency unions can't work without political union, would reverse that opinion when it came to a currency union with Scotland, the SNP says everyone is "bluffing".

"When the banking analysts, economists and the Financial Conduct Authority said the SNP's alternative currency plan of using Sterling without a currency union would mean the departure of all the large Scottish banks and many other financial institutions they were told that was "scare-mongering".

"When fiscal experts said an independent Scotland that was sterlingized or that had its own new currency would have to have additional austerity they were ignored or called liars.

"When government sovereign debt experts warned that if a newly independent Scotland walked away from its share of UK debt that would have implications for the price at which it could raise new debt thereafter that was skipped past.

"When the President of the European Commission said an independent Scotland would not automatically be a member of the EU and would have to re-apply the SNP just asserted he was wrong.

"When the former European Commissioner for Monetary Affairs said that if an independent Scotland used Sterling without a currency union (and hence no central bank) that would be incompatible with joining the EU and noted that both Iceland and Montenegro had been required to have their own central bank to apply for EU membership that was swept aside as an old question.

"The British establishment has struggled with the shamelessness of the SNP here. The SNP really does not seem to care about expert opinion."

You can read the full article here.

Comments

Jim said…
It goes to show.

The YES campaign's economic policy is at best None existent but closer in reality to disastrous for Scotland, but still the YES campaign are putting up a good fight.

Its showing that the economic arguments are not the number 1 priority for most voters. The question in the eyes of a lot of voters is not "how will Scotland be economically best off, under Westminster or Edinburgh governmment?" the question is "who should govern scotland, Engllish people in Westminster or Scottish people in Edinbrough?

The 1992 Clinton campaign message of "its the economy stupid" does not tend to translate into ballot box wins, certainly not on this side of the pond.

We can see this by the strength of the YES campaign, despite it having no serious answers for the economic questions.
Jim said…
I can understand the NO campaign going for the jugular with economic arguments, it is after all the NO campaigns greatest strength. I just don't see it winning over as many people as the sovereignty arguements of the YES campaign.

in 1992 Major won an election dispite the country being in one of the worst recessions of the 20th century.

in 1997 he had a vast improved economy and stood on the slogan "britain is booming dont let labour ruin it" - then there was a labour landslide.

in 2005 blairs lot were campaigning on Low unemployment, low interest rates, economic growth.........they lost 94 seats, mainly down to an issue in Iraq.

in 2010 we were in the mist of a terrible recession, yet the conservates did not win, the economy was not ****** *****'s biggest enemy, the election that was not - was.

We can see historically that "its the economy stupid" does not seem to work so well in the UK
Jim said…
The odd thing about the "Indyref" is this though. Even if you dont lose you cant win.

If the unionist side win then they lose because it has effectively given Devo Max to Scotland.

If the Independence side win then they lose because the first thing Salmond wants to do with that very independence is palm off the responsibility and hand Scotland over to the EU.

Great isn't it.

Anonymous said…
Jim's nailed it. It's not about the economy it's about who should govern Scotland, the people of Scotland or all the people of the UK which by default is England.
Chris Whiteside said…
Jim, you are absolutely right on all those points.

Yes, the relationship between the state of the economy and how people vote has been weaker in the UK in recent years.

If people in Scotland were voting purely on a rational view of economic self-interest, the vote would not be neck-and-neck, as it appears to be, but a massive landslide for "No."

Of course, some of the people voting for "Yes" realise that they are taking an economic risk and are taking a considered decision that they think it's worth it. They have the right to make that decision, but I feel sorry for those who have been fooled by SNP fairytales.

And whichever way the vote goes, this is going to be a different country after Friday.

If "No" wins, the Scots will still get much more control over how they are governed, which I will welcome - provided that the English, Welsh, and Northern Irish get the same.
Anonymous said…
Only a "yes" win will produce a 'real' change for Scotland and the rest of the UK.
Chris Whiteside said…
You are entitled to your opinion, but I'm equally entitled to disagree.

The establishment has had a big fright - in itself a good thing -
and I think they realise that a few cosmetic steps towards further devolution will not cut it.
Jim said…
Im all for more devolution, and obviously i would like to see it in England, Wales and Northern Ireland as well. Though, much like yourself, what I absolutely do not mean by that is another layer of politicians e.g an English parliament, or the recent suggestion of a Northern parliament.

Jim said…
^ actually thinking about Copeland B C, Maybe I need to be careful what I'm wishing for :o)
Jim said…
By the way, thought i had better add. I still think the referendum will end around 60:40 in favour of NO.

not because independence is a bad idea, but because people will understand that Salmond's exit plan is utter rubbish.

Chris Whiteside said…
We're obviously in agreement about devolution - though I share your thought about "be careful what you wish for" where Copeland BC is concerned.

Mind you, if CBC had more power the same "silent majority" who are fed up with the present state of Copeland Council and produced the "Time for Change" vote for a mayor might manifest itself more often.

I don't know what's going to happen on Thursday. You're absolutely right about the difference between what an intelligent plan for Scots independence might look like and what Salmond is actually proposing.

We shall see soon enough.
Jim said…
Friday 19th Sept

Some times being right all the time gets tiresome. its not hard to do either, remember everything is cyclical and its easy. But it does get Irksome after a while, just once I wish i was wrong on something, is it too much to ask???
Jim said…
Maybe I should join the Labour party, at least then I can be wrong about everything for a while :)
Chris Whiteside said…
In that at least they do a good job. Someone once told a person who had said they had half a mind to join the Labour party,

"Well, that's all you need."

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