In the midst of a Twitter storm this week, I realised that the bulk of the 3,000+ responses to a chart I published were from unionists, almost all of whom appeared to insist that the only debate that could be had over independence for Scotland was for the nats to present cast-iron evidence of the exact fiscal circumstances that would follow upon independence.
While no-one serious about their country’s future should airily ignore sensible projections, this storm was much more than about prudent consideration. Many of the responses insisted that the argument must be couched in crisp numeric terms and that GERS and IFS projections pretty much scuppered any rosy future for an independent Scotland before it was out of the traps.
Now there are plenty of nationalists with passion so fervent that they get heatedly irrational should anyone question their goal. But I contend this is not helpful. The other 55% not yet convinced will not change their mind under pressure of blind fanaticism. What might sway them is a rational discussion of what most neutral observers might agree were facts—or as close as we’re likely to get in the woolly world of economic projections.
Let’s start with this year’s IFS evaluation of the Scottish deficit, shown in their paper of March 2016. The columns are for the years 2014 through to 2021.
This is an even gloomier picture than the previous take. The main explanation:
“Oil revenues are expected to be negative: -£0.8 billion a year, on average, between 2015-16 and 2019-20, compared to +£0.7 billion a year in last year’s forecasts. The OBR’s forecasts assume an oil price of $35.50.“
Clearly such low prices continuing would vaporise any oil revenues, as well as having a knock-on effect in prosperity and jobs in dependent industries. North Sea revenue fell from more than £10.9 billion in 2011-12 to less than £4.8 billion in 2013-14, before dropping to £2.25 billion last year. This was driven by a price for a barrel of Brent Crude dropping from $110 through $82 to $45 in that time.
So, were oil prices to remain in the toilet, revenues from oil would stay negative and Scotland’s budget deficit would require heroic growth from other industries to pull it out of such doldrums as enumerated above. But what if there were some evidence all this was not a foregone conclusion. What if some major financial institution were to project some other scenario. Would that not be as likely a future? Let’s take, say, the World Bank, as weighty a voice as you could wish and one unlikely to be swayed by nats. Or, for that matter, by HM Treasury.
Taking this scenario, instead of a £0.7bn annual hit, the Scottish balance would see close to a £3bn boost from oil by next year, rising to £4.4bn by 2020. In that year, even assuming no improvement in the rest of the economy, GERS figures should then show a Scottish deficit for 2020 of around £8.5bn—a full third lower than the current projected figures.
Though this, in itself, does not erase Scotland’s fiscal deficit, it does show that OBR projections, which drive both IFS analyses and UK government GERS, are not facts after all. They are, at best, educated guesses and, at worst, political bias.
Which is why unionists, gleefully using them to belittle their country, should ca’ canny throwing them about as if they were gospel.