The finances of an Independent Scotland.

TrickyTree83

HAMISH_MCTAVISH wrote: »

Your lot voted for us all to become poorer.

Get off your high horse....:cool:

As you've quite clearly stated, voting for independence will make Scots even poorer than Brexit would.

Where's the logic?

GreatApe

HAMISH_MCTAVISH wrote: »

Currency deflation is not the solution.

It makes a country and it's inhabitants poorer just as surely as reductions in income.

why would it make the people of Scotland poorer?

Wealth fundamentally is about productivity. A teacher or accountant or solicitor or (any of the other 80% or so of the jobs that are service sector) are not one bit more or less productive if the Scottish pound goes up 50% or falls 50%

The UK pound over the last couple of years has fallen 20% yet I dont believe you believe we are a full 20% poorer in real terms? I bet you and most people would say we are more or less exactly as well off as we were then so at best immeasurable

GreatApe

I don't see why a developed modern educated independent block of 5 million can not be a productive well off nation so long as there is a free floating currency.

If a Joxit makes Scotland poorer (Scottish pound falls) they will just produce more locally and import less so for instance they might not pay a net >£200 million to import BBC services mostly created in London or for instance they will export more whiskey and oil (measured in scottish pounds) or import cheaper versions of various goods (so import a Ford rather than a Jag) and consume more domestic goods (Iron Bru over Coke). Also not forgetting more domestic tourism and less money out to take foreign holidays.

Overall I do not see why a 'poorer Scotland' aka a lower Scottish pound should result in actually poorer scots or what most people would think about as poorer (aka fewer hospitals or doctors or police). What it actually means is scotland will have to produce more locally and import less this means more hours worked or more productively worked or more people in work working.

The UK pound is down more than 20% vs the dollar over the last two years yet the UK is in a better position now vs two years ago, unemployment is low and lower than then and the nation is not poorer.


Having said all this if I were a soct I would still vote no to independence as the process will likely be horrific and even if there is no large net negative economically there is probably no large net gain to be made.

zagubov

Every single negative post in this and and each of the other threads about iScotland is based on underestimating the nous, gumption, creativity, inventiveness, practicality and downright orneryness of the people who are happy to live in Scotland.

If by some macabre happenstance, they don't rise to the challenge of making a success of independence, then I've got to imagine the other 200+ countries are pretty much stuffed.:o

TrickyTree83

zagubov wrote: »

Every single negative post in this and and each of the other threads about iScotland is based on underestimating the nous, gumption, creativity, inventiveness, practicality and downright orneryness of the people who are happy to live in Scotland.

If by some macabre happenstance, they don't rise to the challenge of making a success of independence, then I've got to imagine the other 200+ countries are pretty much stuffed.:o

Over time, anything is possible, from a Communist state, a dictatorship, a return to absolute monarchy, as is a successful democratic state. No one is saying that in the indeterminate future (i.e. long term) that iScotland couldn't work. But your generation and the generation after you, and possibly the one after that would suffer as a result of independence at the moment.

The ducks are not in a row.

Tromking

zagubov wrote: »

I humbly invite the UK to become so prosperous that not only does Scotland not want to leave, but the EU decides to join it.

I humbly invite the devolved Scottish Government to declare that Scotland is an independent nation in waiting and cast aside the Barnett arrangements.Proper Governments don't need bungs from elsewhere.
As far as the EU goes, the prosperity of its citizens is always trumped by the need to protect 'The Project".

antrobus

HAMISH_MCTAVISH wrote: »

...

The deficit.

According to GERS, the current Scottish budget deficit is around £15bn per year, or roughly 10% of GDP. .

GERS is an "accredited National Statistic publication", so one should start off by believing that the numbers are right.

HAMISH_MCTAVISH wrote: »

...Now - you can argue all day long that an iScotland would have different figures to a Scotland as part of the UK and you'd be right to do so... .

It is inevitable that an iScotland would have different figures. Who knows, perhaps there is some scope for savings within that £68 billion. One thing is reasonably certain; the one-off cost of establishing the infrastucture necessary to operate as an independent state will be in the order of billions, and there will be the extra cost of running this infrastructure.

HAMISH_MCTAVISH wrote: »

....And deficit denial is not a credible solution...

Absolutely.

If this hypothetical iScotland starts off with a £15bn deficit, then there will be a crash deficit reduction programme. £15bn is too big a number.

antrobus

HAMISH_MCTAVISH wrote: »

Currency

This is fairly straight forward as there are limited options.

1) Keep using the £ sterling within a formal currency union under a negotiated deal with rUK. BOE would remain as lender of last resort and regulator for Scottish monetary policy. Politically difficult - but probably not impossible - if for example a quid pro quo conversation were had around Trident basing rights....

It would be "politically difficult", because 1) the UK has already said 'no', (2) it's a strange kind of independence that involves sub-contracting monetary policy to a third party, 3) I don't know what the EU would make of such an arrangement, and whether or not it would consider a state a potential candidate if it lacked a central bank.

This seems to suggest that they expect that you do.
https://www.ecb.europa.eu/ecb/tasks/international/assistance/html/index.en.html

That is not to say that there is not a price that the UK would be willing to accept for such a deal. But it would effectively mean that there was no Scottish monetary policy; the UK is going to continue to run GBP in the interest of the 60 million or so south of the wall.

And that might well still be an issue as regards membership of a body like the EU.

HAMISH_MCTAVISH wrote: »

...2) Use the £ sterling anyway outwith a formal union - ..hugely undesirable and would lead to a mass exodus of banks and financial services companies...

In the absence of a Scottish central bank, every bank will move their head office somewhere else. (At least RBS and Lloyds will in about 60 seconds.:)) This iScotland needs it own financial regulation and supevision infrastrure, otherwise the rest of the financial sector will join them.

Using the "£ sterling anyway" isn't really much of an option; you might as well use the £ Scottish.

HAMISH_MCTAVISH wrote: »

...3) A new Scottish currency with our own central bank - fraught with difficulties - would be a weak currency highly vulnerable to speculative attack and without enough resources to back it up from a central bank perspective - not a great option but it is a possibility for a transitional arrangement....

Probably the most likely option. A new Scottish pound (or whatever you want to call it), initially maintained at a 1:1 parity with GBP, followed by a later decision to float. (Depending on the cost, if any, of maintaining parity.)

Which I believe is what Ireland did.

It would be as transitional as this iScotland wanted it to be.

HAMISH_MCTAVISH wrote: »

....4) Join the Euro - probably the best long term solution - but requires a transitional interim solution and large deficit reduction first to meet the joining criteria...

Membership of the EU will entail a commitment to join the EZ, at some undetermined date in the future. (I don't see there being an opt-out on the table.)

No doubt this iScotland will be able to make it's own decision as to when to decide (if ever) to adopt the Euro.

HAMISH_MCTAVISH wrote: »

...The ideal solution for currency would be (1) as a negotiated transitional arrangement for a limited number of years followed by (4) as the long term solution.

There will have to be a "transitional arrangement" . There may or may not be a need to negotiate with (say) the Bank of England in the short term in order to get it to work. The long term solution would be either a floating Scottish pound or the Euro. Take your pick.

antrobus

HAMISH_MCTAVISH wrote: »

...Full EU membership is a complicated topic - and depends on the successor state argument.

I am aware of the "successor state argument". The trouble is that the EU has made it reasonably clear that, whilst it would be happy to consider an application for membership from this iScotland, it doesn't set accept that there is any "automatic right". And it would be the EU that would need to be convinced of this argument.

And in any case, as far as the UK is concerned, we are (it would seem) only weeks away from pressing the Article 50 trigger. In which case it would have to be assumed that the UK will cease to be a member of the EU in about March 2019.

So by the time that these hypothetical independence negotiations take place, Scotland will already have exited the EU, so it won't matter anyway. This iScotland will just have to submit its application. I don't expect there would be any problem, most if not all of the acquis would already be in place, so it shouldn't take that long. Or at least not as long as some of the more recent new members.

scott_lithgows

cogito wrote: »

Whether Scotland is independent or not, whatever the outcome of Brexit, the Nats will always blame the English for all their ills.

Not that "third" of Scots that will swing it though,it's the ones in the middle ground.