Opponents of Scottish independence often say that the country would be impoverished. Proponents scoff. In truth, the economic arguments are both inconclusive and irrelevant.
The U.K. government spends 18-per-cent more per head in Scotland than in England. The Treasury’s report on Government Expenditure and Revenue Scotland (GERS) shows that an independent Scottish government would have run a deficit of 17 per cent of GDP in 2009 to 2010, if it took in 8 per cent of the revenue from North Sea oil and gas – a sum corresponding to the Scottish share of the U.K.’s population. That makes separation sound like a bad deal for Scotland.
But the North Sea resources are mostly in Scottish waters. If the revenue was allocated according to national boundaries, the GERS report shows that Scotland’s fiscal position would have been stronger than the U.K.’s. Even without that boost, Scotland’s economic gross value added – basically GDP before government redistribution – is only 10-per-cent less than the British average. A fully sovereign government would be better motivated and more able to close the gap than anyone in London.
These arguments can only be resolved after contentious debates about who gets what portion of currently shared assets and liabilities. But in any reasonably fair division, it looks like Scotland would be neither substantially richer nor massively poorer as a fully independent country.
Besides, political bickering over details of division should not obscure the basic economic fact: As long as the European Union holds together, Scotland could thrive on its own. Like Denmark and Finland, which have roughly the same population, it could profit from the large single market and common regulatory structure. Like their Irish peers, Scottish leaders might prefer the euro to the pound.
The currency question can and should be decided largely on economic grounds. But the existence of a successful EU makes money a secondary issue that threatens to obscure the more important political and cultural factors. The primary, critical question is whether Scotland still has a national identity three centuries after it was merged into Great Britain.
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