Why Yes Is the Answer III—It’s the Economy, Stupid!

There is a clear case for an independent Scotland to prosper more than it has to date within the UK. I confess that I have not examined all the contrary evidence put out by HM Gubmint on its website at public expense but any open-minded Martian would find it a) turgid; b) light on facts and c) questionable in its conclusions. You need only hold your nose and point your browser at:

https://www.gov.uk/government/publications/scottish-independence-referendum-money-and-the-economy/scottish-independence-referendum-money-and-the-economy

for the sheer self-serving vacuousness of the arguments to assault your senses. For example:

  • Scotland is a successful, growing economy, as part of the UK Scotland has the highest economic output per person behind London and the South East.
  • The UK’s economy grew by 1.7% in 2013 – and the recovery is forecast to continue – with growth of 2.7% in 2014.
  • There are more people in work across the UK – more than 30 million – than ever before. The UK’s overall employment rate is higher than the USA for the first time since 1978 and, as part of the UK, Scotland’s employment rate is greater still.
  • Nations within the UK have strong, important and beneficial trade links – In 2013, Scotland sold £50 billion worth of goods and services to the rest of the UK and bought £63 billion worth of goods from the rest of the UK.

All of which is fascinating. But it makes no case whatsoever why Scotland needs to remain part of the UK. Indeed, the reverse could be argued, since Scotland appears to be doing so well within the UK and all of us are part of the EU open market. The Westminster beancounters then go on to say that Scots already control 60% of expenditure and receive 10% per capita more than England (conveniently ignoring oil revenues). So??

The entire 2000-word document is in the same vein, verging on the naff. There are four such ‘Factsheets’, plus a dozen ‘Scotland Analysis’ papers totally well over 1,000 pages in all. The one on Currency and Monetary Policy is typical of them all, seeking to rubbish all options for use of sterling by both countries, as if it were not in England’s interest to see an independent Scotland succeed. This self-destructive myopia is a leitmotif of the entire UK government approach to Scotland. Given the strength that Scotland brings to the UK economy, such self-interest is understandable. But to present the debate as if Scotland were a basket case while citing umpteen positive parameters as if they could only ever be realised under Westminster’s sage tuition takes rare cheek.

But let’s leave aside those Tories who have made themselves foreign to Scotland and their city chums whose wizard wheezes need the biggest fiscal stage on which to play. Let’s also leave aside a ‘feeble fifty’ Labour MPs—in 35 years after scuppering our ’79 referendum they have grown fat from the imperial trough but done diddly-squat on behalf of their Scottish constituents (honourable exceptions: Donny Dewar and John Smith who had both ideas and principles, working themselves into early graves trying to stick to them).

Let’s look at this ‘recovery’ of which Lord Snooty & Chums are so proud. “The economy” says the Treasury “grew by 1.3% in 2013“. Let’s see what the Evening Standard—as big a booster for London as you can get—says about that:

The UK’s economic recovery is dangerously unbalanced, with almost 10 times more jobs being created in London than in the next best city, according to a new report. Research by the Centre for Cities think tank revealed that London accounted for 80% of private sector employment growth between 2010 and 2012.

The kind of jobs created were mostly service sector jobs—little surprise given London’s relative paucity of manufacturing. So, comparing Scotland’s recovery with England’s can we distinguish differences? Since 1996, in Scotland, manufacturing has dropped from 19% to 12% of GVA while finance and insurance has risen from 12% to 16%, despite financial crashes. England still retains a significant manufacturing element (e.g. Rolls Royce and foreign car plants) but Scotland’s is larger per capita, specialising in oilfield engineering, whisky and renewables.

In fact, throwing in the financial and tourism sectors, plus growing food and drink exports, Scotland can be said to have a robust economy, closer to London’s than to still-to-recover northern and Midland areas of England. This is borne out by comparing GVA statistics since before the recession, shown in Figure 1.

Figure 1—GVA Change Comparisons (Sourgce ONS & SG)

Figure 1—GVA Change Comparisons (Source ONS & SG)

Clearly, Scotland grew at a rate comparable to the UK until the recession in 2007. At that point, we were initially hit far harder but recovered faster and continue to do so. Indeed, Scotland’s economy appears more robust than the UK (i.e. England’s) and a strong case can be made that they need Scotland to keep them afloat.

It’s about this point when unionists wade in with their hoary warnings how RBS would have gone bust, had Big Bruvver Britain not been there to grease the skids. As they put it:

“The UK Government supported the injection of over £45 billion into the Royal Bank of Scotland in 2008 and offered the bank a further £275 billion of guarantees and state support to protect our financial systems. The total level of this support would have been more than double the total size of Scotland’s economy in that year.”

All factually correct—except that subsidiaries NatWest and Ulsterbank operate solely elsewhere in the UK and are worth £380bn and £48bn respectively—out of total group assets of £1,470bn, 30% of which (£421bn) are held overseas (including £70bn in the  disastrous Dutch foray of ABN-Amro). Ignoring other English RBS subsidiaries, at least 60% of RBS operations were furth of Scotland and—unlike Icelandic banks who had no ‘Big Bruvver’ to rescue them—the Bank of England would have been foolish not to intervene, even had the bloated RBS been based in an independent Scotland at that time.

The alternative would have been to see NatWest and Ulsterbank close their doors and freeze depositors out, as Northern Rock had just done. Hard fiscal realities dictate that banks with heavy presences in other countries can rely on adopted countries to help in times of fiscal trouble. That’s why Icelandic banks went to the wall (because they had none) but the heavy presence RBS/HBOS furth of Scotland gave the Bank of England no choice. (The whole question might not even have arisen, had Scotland been independent, with a real Financial Services Authority—not a toothless gaggle of City chums asleep at the wheel in London. Scandinavia—with robust FSAs—survived without a banking blemish).

Which brings us to the use of the £UK. High-placed unionist payroll members like the Alexander brothers (Danny and Douglas) are falling over themselves to explain why this is an impossibility. Let’s leave aside that the Aberdeen agreement was supposed to lead to constructive dialogue to achieve the best for both countries in the event of a ‘No’ vote and consider several pragmatic points:

  • It’s not England’s £. Shared jointly since 1707, so Scots have a solid claim it’s theirs too
  • Sterling with Scotland outside would stop being a petrocurrency and drop in value
  • Although not independent, sharing the £UK officially means having a Scots member of the BofE board to argue our particular needs—more influence than Scots have now.
  • Any barrier to the 80% of Scots trade that is with England hurts them as much as us.
  • In 1922, independent Eire used the punt—pegged to the £UK—for 80 years before adopting the Euro in 2002. It was done with an amicable agreement which worked well
  • If Scots chose to use the £UK unofficially, there’s nothing England could do about it.
  • Having Scots use £UK unofficially as England gets ever more Euro-hostile could give Scotland a huge boost as Europe used it as a bridgehead in the sterling zone

There’s a strong case that the UK is being petulantly thrawn over this. But let’s assume that Scotland chose not to use sterling, thereby creating a barrier to trade to that £2tn market. When life gives you lemons, you make lemonade; huge markets exist to our East:

  • Germany—£2.500bn economy
  • Low Countries—£830bn total economies
  • Scandinavia—£1,050bn total economies

It would be naive to pretend that this market—twice the size of the present UK—would be immediately accessible. But centuries of London fixation by those who have steered our economy have lost us historic links with our other neighbours obvious from one glance at a map. Aberdeen is closer to Oslo, Copenhagen, Hamburg and Amsterdam than to London.

It’s high time Scotland stood up for ourselves in Europe and not thole this self-serving guff from Westminster and (especially) the new herd of myopic UKIP MEPs. Europe has faults that need fixed but Scotland has many friends (Iceland today became the latest to go public) who will delight at Scots distancing themselves from English xenophobia and wistful hankerings for a lost empire. Scots were England’s hard-headed partner in building, policing and administering that empire; but 21st century trade opportunities are global and not just in pink-painted bits.

Seen objectively, the idea that the EU would not fall over themselves to admit a dynamic, viable, energy-rich, export-rich Scotland as soon as they detach from England is really laughable. And that’s in the event that the Commission were not to interpret an existing member splitting into two would not entitle both to automatic membership. The EU is as creative at political fudge as any organisation. Scotland would, like Sweden, have to sign up to eventual adoption of the Euro. But, like Sweden, it only need finesse its finances to that they fail convergence criteria indefinitely and the kroner/£Scots could last forever.

Look at it the other way. If Scotland were already independent, with a stronger economy than England, better trade balance, more friends, no fiscal drag of Trident & ‘global police’ delusion, no europhobic faction, less haves/have-not inequality and a reputation for good education, resourceful engineers and generous hospitality, why on God’s green earth would they choose to partner up with a greedy, inward-looking, nostalgia-fixated has-been like London-dominated England?

About davidsberry

Local councillor, tour guide and database designer. Keen on wildlife, history, boats and music. Stood for the Scottish Parliament 2011; lost by 151 votes.
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