The finances of an Independent Scotland.

TrickyTree83

antrobus wrote: »

Read it. It's hoot.

But even they have to put in £3.5bn worth of tax increases in year one to get the deficit down to 5.54%.

See, told you so.:)



I think you miss the point of this forum, and particularly this thread. No one expects the SNP to post its answer to the question raised in the OP. The idea is that you post your answer.

And if you don't know the answer, won't it be a great time saver if you just say so, and move on. Then you will have more time to devote to your hobby of reading nonsense tweets on twitter.:)

P.S. You won't get anything from the SNP at all. They're not going to start spelling out the extent of the tax increases and/or spending cuts neccessary to reduce that deficit. :rotfl:

Exactly, if we're talking in the economics forum about economics we should do so rather than chat about how people feel about the Lib Dem's or whoever else.

More and more we're seeing some on the pro-independence side openly admitting that the financial situation looks grim compared to Brexit.

So when it comes to the pound in someones pocket they're better off in an "isolated, backward, xenophobic, racist, little englander, tory government" UK (I thought I'd get it out of the way for usual suspects) than going back under the yoke of Brussels under their own steam. Nothing is going to change that in the next couple of years due to Scotland's limited exposure to the EU in terms of trade, even the harshest of Brexit deals where all trade is lost, Scotland would be better off in the UK.

Where does the argument go from there? Probably something along the lines of virtue signalling that they're not like the racist, xenophobic, conservative English.

"We may be poor, but you'll never take our virtue!"

(with a roaring trade in Chinese made replica handkerchiefs)

TrickyTree83

Moby wrote: »

Splitting hairs...changes nothing in the point I made!

.
What you asked for was not going to help your understanding. I was assisting you to see beyond your narrow perspective. Always happy to help.;)

I want to understand the economic case for iScotland, if indeed there is one to be made that makes Scottish people wealthier with a higher standard of living than they would have under the "nasty Tory Brexit Britain".

I've been waiting a while, I'm going to go out on a limb and suggest it's never going to happen.

I couldn't care less about the 'feels', if a referendum comes to pass and the electorate are informed that Brexit isn't as bad as it's made out, and independence is far worse than it's made out to be (i.e. the SNP are massive liars), the choice when it comes down to it in private in those booths will be an easy one. Because for the majority of people (those in work) Conservative government isn't as bad as it's made out to be, mortgages, jobs, NHS, taxation will be on their minds.

Reading the left wing media and some left wing posters on here you'd think the Conservatives were killing the first born sons of every family (especially Scottish) and the world was in imminent danger of armageddon.

Moby

TrickyTree83 wrote: »

I want to understand the economic case for iScotland, if indeed there is one to be made that makes Scottish people wealthier with a higher standard of living than they would have under the "nasty Tory Brexit Britain".

I've been waiting a while, I'm going to go out on a limb and suggest it's never going to happen.

I couldn't care less about the 'feels', if a referendum comes to pass and the electorate are informed that Brexit isn't as bad as it's made out, and independence is far worse than it's made out to be (i.e. the SNP are massive liars), the choice when it comes down to it in private in those booths will be an easy one. Because for the majority of people (those in work) Conservative government isn't as bad as it's made out to be, mortgages, jobs, NHS, taxation will be on their minds.

Reading the left wing media and some left wing posters on here you'd think the Conservatives were killing the first born sons of every family (especially Scottish) and the world was in imminent danger of armageddon.

I don't know if you'll be convinced by anything on this forum regarding a pure economic argument for independence but to me that ignores the basic fact that these things are never about economics anyway. The Brexit vote has shifted the ground in Scotland politically and socially. I think it's only a matter of time now. Brexit has given the SNP a new angle.......English nationalism........ the very same irrational force driving the Brexit bandwagon. What is sauce for the goose is sauce for the gander! The economic irrationality of Brexit as so ably pointed out by Tony Blair yesterday (whatever you think of him, he towers above any of the current blerts in his insights), is the final nail in the Union coffin.

davomcdave

Moby wrote: »

I don't know if you'll be convinced by anything on this forum regarding a pure economic argument for independence but to me that ignores the basic fact that these things are never about economics anyway. The Brexit vote has shifted the ground in Scotland politically and socially. I think it's only a matter of time now. Brexit has given the SNP a new angle.......English nationalism........ the very same irrational force driving the Brexit bandwagon. What is sauce for the goose is sauce for the gander! The economic irrationality of Brexit as so ably pointed out by Tony Blair yesterday (whatever you think of him, he towers above any of the current blerts in his insights), is the final nail in the Union coffin.

If the Scots want to leave the UK then nobody is stopping them. They've had two referenda so far in my lifetime.

It would be an impressive exercise in self-destruction for them to do one but as the Scots keep voting for Socialism then perhaps I shouldn't be surprised.

beecher2

davomcdave wrote: »

If the Scots want to leave the UK then nobody is stopping them. They've had two referenda so far in my lifetime.

It would be an impressive exercise in self-destruction for them to do one but as the Scots keep voting for Socialism then perhaps I shouldn't be surprised.

Since 1979 we've had one referendum on independence and two on devolution.

davomcdave

beecher2 wrote: »

Since 1979 we've had one referendum on independence and two on devolution.

Ah yes, I suppose they did. Good points.

antrobus

Shakethedisease wrote: »

No it's a debate forum. ...

Exactly. So you need to debate. When you are ready to let us know what steps you think this hypothetical iScotland should take to

Shakethedisease wrote: »

..We post opinion. Tricky asked for a positive economic case for an independent Scotland. So I gave him one to moan about, and you too. And I did say moan when I posted it for a reason...

Actually you didn't. You posted a link to that 'white paper', which does not address the economic case for an independent Scotland, but rather the fiscal position. Whilst the economics and government finances of a nation ar indeed linked, they are two quite different things.

Shakethedisease wrote: »

...Feel free to post your own opinion on the actual link presented to you in this debate forum. I might read it, but I may or may not agree with your opinion since we are debating issues from opposite ends of the debate. The link provided is for your own perusal and discussion so feel free.

I already have. What's yours?

Shakethedisease wrote: »

...My hobbies involve rowing, crossfit, weightlifting, reading and the odd box set. As well as five children and a grandchild. I have plenty of things to do as well as twitter. And at least I'm not on here insulting complete strangers.

No, you're here to post nonsense you've copied and pasted from twitter that insult everybody's intelligence, which you then defend (when caught out) as 'satire' (sic).

Shakethedisease

antrobus wrote: »

Exactly. So you need to debate. When you are ready to let us know what steps you think this hypothetical iScotland should take to



Actually you didn't. You posted a link to that 'white paper', which does not address the economic case for an independent Scotland, but rather the fiscal position. Whilst the economics and government finances of a nation ar indeed linked, they are two quite different things.



I already have. What's yours?



No, you're here to post nonsense you've copied and pasted from twitter that insult everybody's intelligence, which you then defend (when caught out) as 'satire' (sic).

Do you really think no one else here uses Twitter ? Anyway, as ever, if you have a personal problem with me or my posts then let's take it off the public boards ( because no one else is remotely interested ) and feel free to message me about it. If you have a problem with the content or my posts on the topic/issue at hand then counter it.

Far too many interesting threads in forums like these end when they descend into personal slagging off matches, and you're in danger in killing this one off by going down the same route. Back off bub, I'm not interested.

On topic, I don't have a positive case white paper (fiscal or economic) outlining the economic, social challenges and possible successes covering every facet of Scottish society and economy for the short/mid term that I personally have written out no. Do you know of any group, political party or other entity that has since the SNP released their last white paper in Nov 2013 ? If so, let me know. Other than that I provided a link to the ONLY paper I know OF, ( economic or fiscal ) as requested by Tricky.

He doesn't rate it, but that's hardly any surprise. Any thoughts on it yourself ? And while you're at it, there's a Brexit thread here also in need of a positive white paper outlining the UK's economic challenges and possible successes from 2019 onwards. Perhaps you personally would like to write one for the thread ? I'd sure love to read it. Do you have one to share ?

antrobus

TrickyTree83 wrote: »

I want to understand the economic case for iScotland, if indeed there is one to be made that makes Scottish people wealthier with a higher standard of living than they would have under the "nasty Tory Brexit Britain"....

Strictly speaking, the question posed in the opening post was;

As we all know Scotland has a significant budget deficit problem that is currently an impediment to independence.

and made specific reference to;

£9 billion - the Scottish 'black hole' - the amount we're subsidised by Westminster out of that £15bn, (the remaining £6bn is our population share of the current Uk deficit)

Obviously, government finances are largely driven by the success or otherwise of the economy, because that's what generates the taxes. But if you start off with a fiscal deficit of 10% of GDP, you have to take action bl00dy quick, because that kind of deficit can stuff your economy before anyone ha

Our dear friend Hamish appears to be able to some arithmetic, and has therefore suggested that what would be required is either a 15% reduction in government spending across the board, or a 15% increase in taxation revenue, or a combination of both.

I suppose I could point out that 15% of cuts would save £10bn, but that you would need a 20% increase in tax to produce an extra £10bn of revenue. But, in any event, that is the kind of short term (as in a few years) crash austerity programme that would be needed.

To state the obvious, a £15bn fiscal deficit, means that you need to persuade someone else to lend you £15bn, and people can sometimes be reluctant to do so

As I noted in post #67, the size of any future fiscal deficits depends on the price of oil. Brent Crude at $110-$120 and the fiscal deficit might only be 2% (as it was in 2011-12), Brent Crude at $45-$50 and the fiscal deficit is 10% (as it was in 2014-15). Brent Crude has been crawling upwards of late and now seems to be $56, so one might expect that 2016-17 might be a little better.

What that tells you is that this hypothetical iScotland's fiscal deficit (and indeed its economy to a significant extent) is dependant on the price of oil. You could of course, simply assume that Brent Crude will in future be $100 a barrel, or even $200, and that this hypothetical iScotland will be fine, or indeed overflowing with riches. Or you could assume that some darned fool will get fission to work (or something similar), Brent Crude will be left at the bottom of the sea, and thus house prices in Aberdeen will crash and burn, and iScotland goes to the IMF.

P.S. Whilst Hamish might believe that "we all know" that this iScotland will a "significant budget deficit problem" there are clearly some people who don't want to know it, and presumably hope that by pretending it isn't a problem, it will go away.


.

HAMISH_MCTAVISH

antrobus wrote: »

As I noted in post #67, the size of any future fiscal deficits depends on the price of oil. Brent Crude at $110-$120 and the fiscal deficit might only be 2% (as it was in 2011-12), Brent Crude at $45-$50 and the fiscal deficit is 10% (as it was in 2014-15). Brent Crude has been crawling upwards of late and now seems to be $56, so one might expect that 2016-17 might be a little better.

What that tells you is that this hypothetical iScotland's fiscal deficit (and indeed its economy to a significant extent) is dependant on the price of oil.

Well, yes.

It would seem the sensible thing to forecast for oil prices of around $50 and be in a position to cut less if oil prices rise...

Back to the point in the OP however - and as nobody else has really taken up the challenge....

There do seem to be some options for closing that £9bn gap.

1. Spend less on defence in the short term - I'd personally hate to do so but there's zero prospect of the rUK leaving it's Northern shoreline undefended against potentially hostile aggressors.

You could quite easily spend a billion per year instead of 3 billion by maintaining a small standing army, a couple of fisheries patrol vessels, a limited airlift/helicopter capacity and a handful of fighter aircraft. The really expensive bits - subs, a fighting navy, and an advanced air force could be deferred. NATO would get miffed for a while - but an intention to improve would probably be enough.

Possible savings - £1.5 to 2bn per year for the first decade or so.

2. Share of Uk national debt - Scotland could of course walk away from it. But make borrowing to close the rest of the gap unlikely for a number of years.... Not ideal.

Would save around 3 billion per year though.

3. Energy transit tax. 45% of the UK's gas supply transits through Scotland. Press a button to shut down those pipelines and the rUK gets very cold, and very dark, very quickly, and it would take a decade or more and tens of billions in investment to rebuild the capacity elsewhere. Now shutting those down may not strictly be legal - but that's never stopped Putin - as the Ukrainians found out several winters in a row.;)

Hw much is energy security worth to rUK?

A lot...

4. Trident basing rights. How much is keeping an independent nuclear deterrent worth to rUK?

Well it's not quite priceless... But it's close. Somewhere around £3-£5bn per year for up to a decade I'd guess. As there just aren't any other even remotely feasible options.

Anyway.... I doubt we'd end up actually doing all (or even many) of the above - but an iScotland does not have quite as weak a negotiating hand as many on here assume - it would be in both parties best interests to come to a fair and amicable deal.

That deal would certainly require Scotland to live more within it's means than it does today - but it's frankly nonsensical to suggest Scotland doesn't have the ability to negotiate away some of that £9bn gap before having to start cutting spending or raising taxes.