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.