The finances of an Independent Scotland.

ProDave

steampowered wrote: »

A quick google search (source) indicates that public spending across the UK as a whole is £11,200 per person.

Yet public spending in Scotland is £12,500 per person.

On that basis alone, Scotland appears to be getting an excellent financial deal.

With that in mind, I am slightly mystified as to why you think Scotland would have more money for public expenditure if it became independent?

Some people have the intelligence to realise Scotland is getting a damned good deal at the moment in the UK and why would we want to end that?

The less intelligent think things will be better if we leave the UK and stop receiving that subsidy.

A_Medium_Size_Jock

sss555s wrote: »

Scotland has everything it needs to be a successful country raising the standard of living way beyond anything we will ever get from a deceptive Westminster.

In which case perhaps you would be kind enough to explain why the SNP government with it's increasing autonomy has so far not demonstrated that supposed ability?

sss555s

steampowered wrote: »

A quick google search (source) indicates that public spending across the UK as a whole is £11,200 per person.

Yet public spending in Scotland is £12,500 per person.

On that basis alone, Scotland appears to be getting an excellent financial deal.

With that in mind, I am slightly mystified as to why you think Scotland would have more money for public expenditure if it became independent?

Things would be very different and you could throw those figures out the window. There is a large amount of that figure allocated to expenses that would not be applicable (like the fact Scots pay for the Queensferry crossing on their own along with contributing to Buckingham palace upgrades and HS2 etc). It's also an easy target to make cuts into a post Brexit Barnet formula.

ProDave wrote: »

Some people have the intelligence to realise Scotland is getting a damned good deal at the moment in the UK and why would we want to end that?

The less intelligent think things will be better if we leave the UK and stop receiving that subsidy.

I could understand if you were a sloppy council worker who liked there extra paid 2 weeks on the sick per year and turning up to do 2 hours work out of a 8 hour day so you could do overtime on the weekend, while wishing the years away until retirement.

Anyone with any gumption would realise that getting out from under Westminster's thumb is the only chance to better the long term future of Scotland.

A_Medium_Size_Jock wrote: »

In which case perhaps you would be kind enough to explain why the SNP government with it's increasing autonomy has so far not demonstrated that supposed ability?

The increased autonomy is of little help in reality and It's just a measure to try and appease the current situation in Scotland.

If Scotland made big savings in spending it would only put pressure on the amount Scotland receives through the Barnet formula going forward.
There would be little objection to that being cut from those outside Scotland.

antrobus

HAMISH_MCTAVISH wrote: »

Quite possibly.

EEA membership could be done much more quickly anyway and gives us the main short term benefits of EU membership (single market, freedom of movement, etc)

I'd be quite happy with that while the EU entry process went on in the background however long it takes.

EEA membership is available to any "European State" that either becomes a member of the EU or becomes a member of EFTA. Irrespective of what route is selected, said European State needs the approval of "all Contracting Parties" i.e. the 27 remaining EU states and the 3 EFTA-EEA states.

See article 128 of the Lisbon Treaty.

I cannot see how it would be 'quicker' to take the EFTA route, you still need to get the same 31 countries to agree to this iScotland's membership. Apart from the fact, that if this iScotland was to apply for EFTA, whilst "the EU entry process went on in the background" they are going to tell this iScotland to stop wasting their time and say 'no'. One has to be realistic about this sort of thing.

P.S. You don't get the benefits of the 'single market' through EU memebership, you get them through EEA membership. Any European state that joins the EU, is obliged to apply for the EEA, but it is another process. See Croatia, joined the EU on the 1st July 2013, but had to wait until the 14th April 2014, before getting into the EEA. I believe this was because Norway wanted a bigger duty free quota of herring in return for their assent. (Since it was going to cost them a few krone, anyway.) Which is the kind of trade off that happens in these sort of negotiations.

TrickyTree83

sss555s wrote: »

Things would be very different and you could throw those figures out the window. There is a large amount of that figure allocated to expenses that would not be applicable (like the fact Scots pay for the Queensferry crossing on their own along with contributing to Buckingham palace upgrades and HS2 etc). It's also an easy target to make cuts into a post Brexit Barnet formula.






I could understand if you were a sloppy council worker who liked there extra paid 2 weeks on the sick per year and turning up to do 2 hours work out of a 8 hour day so you could do overtime on the weekend, while wishing the years away until retirement.

Anyone with any gumption would realise that getting out from under Westminster's thumb is the only chance to better the long term future of Scotland.





The increased autonomy is of little help in reality and It's just a measure to try and appease the current situation in Scotland.

If Scotland made big savings in spending it would only put pressure on the amount Scotland receives through the Barnet formula going forward.
There would be little objection to that being cut from those outside Scotland.

Scotland contributes to large projects in the rest of the country, do you want to tell everyone what Scotland gets back from Barnett consequentials as part of the HS2 project and how much Scotland puts into it. Happens on everything except the Olympics as I understand.

One word - subsidy. You're financially screwed as soon as you leave the UK. Anyone saying differently is a liar, plain and simple.

sss555s

TrickyTree83 wrote: »

One word - subsidy. You're financially screwed as soon as you leave the UK. Anyone saying differently is a liar, plain and simple.

I don't buy that! It may be turbulent for a time but nothing insurmountable long term.

Instead of giving Westminster all our tax to get a "subsidy" back, we will be managing it all ourselves. That is a far better option than remaining under the increasing pressure of the Westminster thumb.

Your quote would be as just to Brexiteers, Mr cake and eat it.;)

westernpromise

Scotland is a net receiver of tax.

Masomnia

Currency-wise it seems to me that the only sensible option would be a new currency pegged to the Euro as a precursor to joining it in a few years while they sort the finances.

ProDave

sss555s wrote: »

I don't buy that! It may be turbulent for a time but nothing insurmountable long term.

Instead of giving Westminster all our tax to get MORE back, we will be managing it all ourselves. That is a far better option than remaining under the increasing pressure of the Westminster thumb.

Your quote would be as just to Brexiteers, Mr cake and eat it.;)

Corrected that for you.

antrobus

HAMISH_MCTAVISH wrote: »

Solutions

It's impossible to argue that an Indy Scotland would not experience a painful transitional period involving significant cuts to expenditure and increases in taxation.

The inevitable consequence of this would be a reduction in standards of living for Scottish people over the short to medium term - and very possibly over the long term as well.

However it's also equally impossible to argue that an Independent Scotland could not survive - and nobody credible has ever attempted to do so....

It depends on what you mean by 'survive'. A number of countries have ended up defaulting on their debt. I believe they have mostly survived, although there were (and are) consequences. I can't remember whether the old Kingdom of Scotland was actually in default before 1707, but I do recall that it has been said that the Darien Scheme was such a financial disaster that it was almost obliged to sign up to the union in 1707.

And you could take the example of Greece, they are bankrupt, they have survived, but at the cost of doing what Germany tells them to do.:)

HAMISH_MCTAVISH wrote: »

...In the simplest of terms, what's required is pretty much as follows:

- A 15% reduction in government spending across the board - 15% cuts to benefits - 15% cuts to public sector salaries - 15% cuts to NHS budgets, and defence spending, and local authorities, etc.

OR

- A 15% increase in taxation revenue, so 20% income tax becomes 23% income tax, 40% income tax becomes 46% income tax, 20% VAT becomes 23% VAT, etc...

OR

- A combination of both to a smaller degree - half through tax increases and half through spending cuts, for example....

That would be the scale of things required. A fiscal deficit of 9.7% would require austerity plus, all other things being equal.

Of course, a lot depends on the price of oil. Here was the Scottish governement back in 2013 predicting a "renewed oil boom" and a possible £57bn in tax revenue by 2018. As we now know, there was no boom, and oil revenues were most recently recorded as £60 m, or diddly-squat in fiscal terms.

http://www.bbc.co.uk/news/uk-scotland-scotland-business-21741825

But then that would be the difference between Brent Crude at $110 and Brent Crude at $40 a barrel. If you look back at (for example) 2011-12, the GERS deficit was only 2.3% of GDP when Brent Crude was $110-$120, which is not to bad, given some inflation and some economic growth, that's perfectly survivable.

But that only emphasises the point that the size of this iScotland's fiscal deficit will depend on how many USD a barrel of oil sells for, and how many Scottish pounds you can buy with those USD. I don't think anybody knows what the price of oil will be in (say) 2020, so nobody knows what the deficit might be. That volatility will create a problem in terms of financing a govenment. It also creates a problem in raising money on the debt markets; there is more risk, and risk has too be paid for.

HAMISH_MCTAVISH wrote: »

...The scale of short term financial pain required would be significant - but probably not impossible to achieve so long as there were no exceptions, no protected areas, no ring-fenced political favourites.

Because as soon as you start doing that, exempting some groups from a moderate amount of financial pain, the level of financial pain required from the remaining groups becomes much larger and politically impossible to achieve.

There would of course also be some secondary effects that I've not discussed here - cuts to income/spending would result in a recession which would worsen the deficit in the short term, but you've converted a structural deficit to a cyclical deficit and it would go away again in due course as things recovered in the medium term.

As things stand now, "short term financial pain" is what should be expected.

HAMISH_MCTAVISH wrote: »

....There would also be a material opportunity to take economic activity away from a Brexiting England and move it to an iScotland that was a member of the EU or EEA - and this should not be understated in scope - but again I've left it out for now.

I'm not convinced there will be a "material opportunity". The UK will have Brexited years before there is an iScotland to take any advantage. There are another 30 countries who are already in the EEA, and they will have already exploited whatever "material opportunity" exists long before this iScotland gets a look in.

And the "material opportunity" might be in reverse. Put it this way; had Scotland been independent in 2006, when RBS and HBOS 'failed', they would have bought Scotland down as well it, as in Iceland mark II. I'm a bit sceptical as to whether this hypothetical iScotland would have the financial resources to stand behind RBS. There could be an exodus of financial business.

HAMISH_MCTAVISH wrote: »

...How should Scotland adjust it's finances to make independence possible?..

Increase taxes, decrease spending, or a combination of the two. There isn't a lot of choice.

HAMISH_MCTAVISH wrote: »

...What would you do?

Being a down to earth kind of person that isn't really attracted to romantic notions of nationhood, I'd keep taking the £8.5bn, while it's still available. That's hard cash on the table.:)