A Chance To Diversify Our Economy.

There has been a heated debate over the past few weeks concerning a new report published by the IFS (Institute of Fiscal Studies). Both sides have been claiming to have the upper hand when it comes to what the report says. Overall, for me anyway, the report has not revealed a lot more new information about the economics of the independence debate. The main points I have gathered are that:

•  The GERS report clearly states that Scotland contribute more than it gets back percentage wise, yet due to the fact that the UK is in a recession Scotland get slightly more numerically from Westminster than we pay back in taxes, yet is still in a healthier financial position to the rest of the UK to the tune of £90 billion.
• Following independence, Scotland's fiscal position would be slightly better than that of the UK, due full control over economic resources resulting in higher tax revenues for the Scottish Government.
• We would inherit less debt to GDP per head compared to the rest of the UK.
• A major asset for the Scottish economy would be our oil revenues, which would provide a significant initial boost to our economy, but due to the finite nature of the resource, could be less of an asset to us  in later decades. 

On face value, the report is pretty balanced, both sides can lay claim to have valid points to shout about. Yet, as you might have expected, the same old rhetoric prevails from the unionist side, points which I have most certainly rubbished at an earlier stage. 

One of the arguments presented by the unionist side when referencing the report is that Scotland's economy would be too reliant on North Sea Oil revenues (around 20% of our GDP comes from oil revenues), and due to the volatile nature of the resource, a price fluctuation could be disastrous for the Scottish economy. And that the oil will run out at some point in the next 50 years, so it is not a wise resource to base your economy on. 

First of all concerning the point made about the over-reliance the Scottish economy would have on oil, the very notion that the oil revenues are a bad thing to base our economy on is nonsense. A quick look at how much debt we would inherit from the UK proves just how much of a valuable asset this is to Scotland. We would inherit approximately £80 billion of the UK national debt, 8.4%. We would also inherit 90% of UK oil and gas reserves, which amount to 24 billion barrels and wholesale value of £1.5 trillion.

This would mean our economic assets, just from oil, would outweigh our debt by ten times. This is a safety net every country in the world would want to have right now in this time of economic uncertainty. It is certainly better than having our economy 60% reliant on a banking sector in which the money can stop almost instantaneously, and is precisely the thing which ruined our economy in the first place.

Recent analysis has show that our economy is not as reliant on oil as the most successful nation in Europe per head at the current moment, Norway. The statistics were compiled by the Scottish Parliament's Information Center (SPICe), and they clearly show that, over the past 12 years, the Scottish economy has been 2.2 times less reliant on oil revenues than our Nordic neighbour. The Nordic economy was 30% reliant on oil revenues, whilst Scotland's is 13.6% reliant.  Having control over its own economy, Norway has managed to build up a $600 billion oil fund to ensure that the revenues gained will last far into the future from when the resource runs dry. 

Then there is the question of, what happens when the oil runs out? Well, that will not be as remotely as bad for Scotland as it first sounds. With full control over our economic resources, Scotland can use the extra capital gained from the industries which flow down to Westminster at the current moment, to diversify our economy and make it not reliant on North Sea oil.

The obvious first investment would be in our renewable energy sector. Currently Scotland has 50% of Europe's wind power, 25% tidal, and 10% wave. Any country choosing not to invest in a sector with so much potential would be daft. Independence would give Scotland the chance to re-industrialise our nation again into researching, developing, and producing renewable energy. The Scottish government are preparing to achieve 50% of Scotland's energy from renewable sources by 2015; and 100% by 2020. Recent progress has shown that to be well on track, with 40% already being met from renewable's.

To bring this to a conclusion, it can therefore be seen that the unionist claims that our economy is reliant on, or to put it how they say it 'better together', in the UK are wrong once again. With full control of our economic resources we, the people of Scotland, can reshape our country into a more profitable, equitable, equal, and greener society, that aims to direct its revenues into raising the standard of living, and the general well being of our population. Rather than spending it unnecessarily on nuclear weapons, bloated defence budgets, and illegal foreign wars. 

The Economics of Independence.

The economic impact of independence for Scotland is the largest and most heated part of the debate. Facts, figures and opinions and flung around anywhere and everywhere to the point where someone who is impartial to the debate really does not know where to start or what side to trust. Thankfully for these people I have researched the economic side of the debate in great detail since the independence campaign started gaining real traction in 2007 with the first SNP government.

What I have found most in the economic part of the debate is that it is the most rife with ignorance. People tend to look at the debate and assert almost automatically that Scotland must be completely subsidised by Westminster, and the fact that we have an annual budget from Westminster must mean that Scotland has nothing in the way of exports to support its economy. Both these claims have been found time and time again to be completely false; and something which I hope to prove in this article, as it only takes a quick look at the bare numbers to see that they add up favourably towards independence.

Let us firstly deal with the importance of the annual budget which Scotland receives from Westminster every year. Currently our budget stands at £29'266.8 million (£29 billion), this budget pays for everything in Scotland. It isn't hard to look at this budget and reach the conclusion that: "This obviously must be the only thing which the Scottish economy depends on!". A quick look at the GERS (Government Expenditure and Revenues Scotland) report in 2010 however, reveals that claim to be wrong.

We currently have 8.4% of the UK population, contribute 9.6% of UK tax revenues and receive 9.3% of Westminster spending, this right away disproves the claim that we are indeed 'subsidy junkies'. The more crafty unionists however will try to play off the fact that Scotland, although contributing more, runs a budget deficit of around £9 billion per year.(That is the nature of a worldwide recession where spending is higher than revenues) When you compare our economic standing with that of the rest of the UK however, one can see that we are in a much healthier financial state. The rest of the UK as a whole runs a deficit close to £100 billion per year; this means that Scotland's public finances are £90 billion better off than the rest of the UK.

One can then quickly turn that around by saying: "Well, even if we are in a healthier financial state than the rest of the UK, if we were independent we would have nothing else to support our economy... other than oil, which will run out anyway". Well yes, the nature of a finite resource is that they will run out eventually, that does not mean however that the revenues from it will somehow disappear the day the oil runs out. Even without the oil revenues anyway, the Scottish economy exports tens of billion more than we receive from out current budget.

The North Sea oil and gas revenues are Scotland's largest economic resource, but it is not our only one, and despite common opinion, it does not make up the majority of our economic resources. UK Oil & Gas values the North Sea reserves at £1.5 trillion. If Scotland were to go independent. We would inherit 90% geographical share of the reserves; this would account to £1.35 trillion worth of reserves.If we now take Scotland's 8.4% population share of the UK £1 trillion national debt, then it is easy to see how quickly we could pay off that debt, just using the oil revenues.

Our share of the debt would be £84 billion. If current production levels maintain after 2014, then Scotland could pay off it's national debt within a matter of at least 6 years, as per annum revenues are around £30 billion. This would then mean that a debt-free Scotland could save up our revenues to ensure that Scotland would be ready to deal with any future crises with ease. This has already been demonstrated in Norway, who, having complete control of their economic resources, was able to develop an oil pension fund worth £600 billion, and were able to bail out their banks with ease; and are currently the only country in Europe not in debt and not running a budget deficit. But it is no use however dwelling on the past economic mismanagement of Scotland at the hands of Westminster, the more relevant question is: What can this do for a future Scotland?

The creation of an oil fund would ensure that an independent Scotland would always have enough finances to fund its public services, and ensure that Scotland would never have to undertake the savage public finance cuts demonstrated by the Conservative Westminster Government of today. It would also ensure that even after the reserves run out, in 50-100 years, the revenues would benefit countless future generations. Instead of being squandered on funding the failed London banking sector, harbouring nuclear weapons 30 miles away from our largest city, and sending young men to die in pointless foreign wars. We would have a real chance to benefit our society.

Moving away now from the issue of oil in an independent Scotland, what else does Scotland have to sustain its economy? It turns out to be quite a lot. The latest Global Connections Survey published by the Scottish Government in 2010 reveals that, other than oil, Scotland does have a lot of economic resources and exports to rely upon. A quick look at the report reveals that Scotland's international exports account to £22 billion, and our exports to the rest of the UK would are £44 billion; together this puts our exports at £66 billion, more than twice our current budget. The Global Connection Survey however does not include oil reserves, as they are treated as extra-regio resources. The inclusion of oil revenues would bring our exports to over £100 billion per year. The report states that:

"The combined value of international and rest of UK exports in 2010 (excluding oil and gas) are provisionally estimated at £66.9 billion, of which £31.0 billion is attributable to service sector companies and of which £26.7 billion is attributable to manufacturing sector companies.  The increase in total exports of +£2.3 billion since 2009 is due to a rise in the manufacturing sector of +£1.7 billion and a rise of +£955 million from the mining, and quarrying & extraction of petroleum sector, despite the a very slight decline of -£150 million from the service sector."

As you can see, in recent quarters the GDP for Scotland has been rising.

 Another part of our economy that can demonstrate how Scotland is not reliant on oil to survive can be seen in our GDP. In 2011, our Gross Domestic Product stood at £124 billion. This excludes extra-regio resources. When including the extra-regio resources. The figure rises up to £154 billion. Therefore it can bee seen that Scotland is only reliant on oil for 20% of our economy.  We only see £30 billion of this back per year... does that sound like a fair deal to Scotland, when we are told we must all suffer together?

To draw this to a conclusion you can see that the Scottish economy is indeed diverse, and made up of many components and industries. We are not 'subsidy junkies', our economy is not reliant on just oil. Scotland has all of the necessary parts in place to create a progressive and successful 21st century social-democratic society. All you have to do is vote Yes.  

It's a Debate About Prosperity, Not Survival.

Hearing Unionist talk on a daily basis, there seems to be a prevalent conception that the entire independence campaign is based on the question of "How will Scotland be able to survive after independence?". This seems rather odd to me, there has been countless admissions from the unionist side that there is no doubt that Scotland would be able to at least stand on its own two feet. The most prevalent in my memory comes from David Cameron who said clearly: "Of course I am not saying Scotland could not survive on its own." If the largest and most public advocate of the benefits of the union, the Prime Minister of Great Britain, agrees that Scotland could survive, then that should be a sufficient clarification for the unionists... unfortunately it never is.

I find it a regrettable situation when the debate around Scottish independence comes back to Scotland's basic ability to survive as an independent country. Time and time again, on both sides of the debate, the claims that we are too wee, too poor, and too stupid to be an independent country have been proved to be based on nothing but total ignorance, and revealed to be a pathetic use of scaremongering.

No one in the mainstream debate surrounding Scottish independence makes the claims that we could not survive as an independent country. (even "Better Together" verifies that in their latest video) Everyone knows that Scotland is a resource rich, energy rich country which has some of the highest education levels in the world. The crux of today's debate is whether or not Scotland is more prosperous as part of the United Kingdom or not, I have much more respect for those on the unionist side who take an informed part in that debate.

I do not need to delve into the nitty-gritty details of how we will be a more prosperous country in the event of independence. - you will be able to find much evidence of that on this blog - What I do want to say however is that the Scottish people need to get away from the childish claims that we could not survive as independent country. Some of my favourite claims which I have heard along these lines are such things as:

"Sean Connery lives in America.", "When the oil runs out, all we'll have is whiskey and shortbread tins!", "How will we even be able to feed ourselves?!", "The only reason Switzerland does well is because they stole Nazi gold after WWII!", "Us Scots can't manage anything!".

While these claims are certainly full of comic value, they do raise a serious point. These are the things which people actually believe about their own country. I have often believed that in a debate the most important thing a person can do is educate those who are wrong, as if you do not, it is ignorance, not truth, that will win. And this is certainly true in the debate about surrounding Scottish independence. The most important thing we on the Yes side of the debate can do over these next two years it to educate those who still believe in these misguided, antiquated, and severely ignorant views.



Linked here, is some evidence of the sustainability of the Scottish economy:

·         http://www.scotland.gov.uk/Resource/0039/00390896.pdf

·         http://www.scotland.gov.uk/Topics/Business-Industry/Energy/Energy-sources/traditional-fuels/oilandgas

·         http://www.decc.gov.uk/assets/decc/Statistics/source/renewables/et6_1.xls

·         http://www.bbc.co.uk/news/uk-scotland-edinburgh-east-fife-16532440

·         http://www.scotland.gov.uk/News/Releases/2012/04/seveneconomicstrengths15042012

·         http://www.heraldscotland.com/politics/political-news/the-myths-of-independence.15629679

·         http://www.newsnetscotland.com/index.php/scottish-economy/4235-would-an-independent-scotland-be-financially-sound

·         http://www.johnogroat-journal.co.uk/Home/Spare-us-the-phoney-analysis-Scotland-can-hold-her-own-7601111.htm

·         http://www.oilofscotland.org/mccrone_oil_reports.html

·         http://www.scotsman.com/the-scotsman/opinion/cartoon/george_kerevan_we_can_still_rise_and_be_a_triple_a_nation_again_1_2040202

http://www.scotland.gov.uk/Topics/Statistics/Browse/Economy