So, today is the launch of “Better Together” aka “The ‘NO’ Campaign”. Can’t say that I wish them well. That’s not because they oppose my personal belief that the Scots would do better running their own country in their own interests. It’s because unionists have yet to explain what advantage Scots would gain by remaining in their union. Their utterings to date are dire warnings but all vulnerable to question, if not disproof.
What really undercuts their statements’ credibility is their uncanny echoes of flat-earth prophets who went before—supposed giants of their day whose lofty status in the firmament of the time rendered them blind to seeing the real world, let alone a better future. Some classic examples:
“Heavier-than-air flying machines are impossible” —Lord Kelvin, President of the Royal Society, 1895
“I think there is a world market for maybe five computers.” —Thomas Watson, chairman of IBM, 1943
“We don’t like their sound, and guitar music is on the way out” —Decca Recording Co. rejecting the Beatles, 1962
“There is no reason anyone would want a computer in their home.” —Ken Olson, president and founder of DEC, 1977
Apparently no era has been free from such hilarious humbug: there’s no reason why the early 21st century should be any different. Indeed, today may become their finest hour as unionists from near and far pontificate how no sane, rational person could want Scotland to become a normal country.
First up to the plate: the egregiously negative D. Alexander MP, aka Maestro of the Mint who has rather jumped the gun by flinging his supposed thunderbolt the day before. He asks: “What would be the arrangements for borrowing and finance under an independent Scotland? If interest rates went up by 1% that would cost families in Scotland about £1bn in extra mortgage costs.”
Well, yes, if you do the sums. But what basis does he have for postulating this as a likely outcome? Or are we here among habitual naysayers whose hefty salary is on the line if the UK ceases to be? Let’s take a look at some global and fiscal mechanisms that indicate what might drive or prevent Scotland getting a poor fiscal rating.
The UK currently enjoys a healthy AAA rating on its government debt. That means some gnomes at Moody’s, Standard & Poor, Fitch’s, etc credit rating agencies agree the UK is able to repay anything they borrow. Many Northern European countries enjoy the same high rating, as does the US. But Italy, Spain and Portugal have ratings of A, BBB and BB+, all of which imply increased risk (and therefore interest rates) while eye-of-the-storm Greece is down at CCC and paying well over the odds to borrow.
The implication of Maestro Alexander’s questions is that Scotland would not have the same high credit rating as the UK currently enjoys. It’s a fair question to ask if there is any basis for this.
First of all, the “better together” slogan and many other unionist litanies forever harp on about how Scotland gets to punch above its weight by being part of a BIG country of 60m, rather than ‘go it alone’ with 5m. Is there a basis to this? Well India, Russia and Brazil are all huge countries with economies that would dwarf Scotland’s; yet they’re all rated BBB—in other words on the world’s fiscal shit list, with ratings exactly the same as wobbly Spain. Meantime Denmark, Norway and Finland—all smaller than Scotland—rate AAA. Hell, so do Luxembourg, Singapore and Liechtenstein and the SUM of their populations is less than Scotland’s. So it ain’t size.
Second, let’s look at economic health. Both UK and Scotland specialise in financial services and, as a result of Irn Broon’s ‘prudence’ being a joke, those services are in intensive care and we now owe something close to 100% of GDP in either case. The UK’s budget deficit has cratered over the last four years, rising to £97.8bn or 6.6% of GDP. At first glance the GERS figures for Scotland show a comparable deficit of £14.3bn or 12% of GDP. But when North Sea oil revenues, based on a 90% share of the fields, is added in, this shrinks to £6.4bn or 4.4% of Scottish GDP. In other words, anyone arguing that the UK can sustain an AAA rating when it is doing 50% WORSE on the world stage has to argue the same for Scotland.
But thirdly, and most conclusively, we really should be talking about comparing the future UK with a future Scotland. With Osbo’s economic strategy in tatters, continued massive borrowing and quantitative easing are inevitable, so UK debt is set to grow, not shrink. And what economic miracle or business breakthrough lies just over the horizon to snatch Britain’s fiscal chestnuts from the fire? None that springs to mind.
On the other hand, consider Scotland. Already energy-rich, oil exploration proceeds apace as oil prices bob along above £90 and the 5-year average, onshore wind approaches half our existing capacity. Meanwhile, offshore, tidal and wave in development will fully exploit our position as inheritors of half of Europe’s renewable energy. Add in that, per capita, we export more engineering, that the whisky export market is going through the roof (up 22% last year to over £4bn) and that tourism is up 16%, now spending over £4.4bn, then you have the basis for as robust an economy as any other country.
In the dismantling of shared institutions, there will be some premium to pay for Scots running their own DWP, Pensions and other government departments currently housed in and around Whitehall. But that will be more than offset by most of those jobs landing in Scotland, with dispensing with the scale of things like embassies that a self-styled ‘world power’ requires, a cut of at least 50% in our defence costs and the possibility of a solid lease sum for England to continue to use Faslane until it works out where to stick its nuclear deterrent.
Put all this together and, no longer burdened by global delusions, a pretty vibrant economy would result, one that would pay back Scotland’s £65bn-or-so debt this union has recently cost us far faster than England will be able to manage. Don’t tell Danny, but once his moth-eaten union ballast is detached from the more dynamic, less service-burdened, more future-oriented Scottish economy, the threat of losing AAA rating and mortgage rate chickens are more likely to be coming home to roost in our English cousins’ homes. A resulting rate rise of 1% would sting unhappy English punters for well over £10bn.