Economic arguments in the Scottish independence debate

hydro17:07 Wednesday 17th September 2014
BBC Radio Cambridgeshire

CHRIS MANN: Last minute campaigning is taking place all over Scotland, ahead of tomorrow’s historic vote on independence. The leading figures on both sides of the debate are making their final pitches to voters in rallies today. So just what will the consequences either way be on things like jobs, economic growth, and of course the pound? Our business reporter Adam Kirtley told me.
ADAM KIRTLEY: Just to put this into some sort of context Chris, the Scottish population is roughly a tenth of the UK population, and the GDP per capita is roughly the same, a little bit less if you don’t include oil, a little bit more than the rest of the UK is you do include oil, but around twenty and a half thousand pounds per person. So therefore, the Scottish economy is roughly ten per cent of the UK economy. So if that goes, that reduces our economy, those of us left down here, but it also means that Scotland is much smaller, and it’s on its own. So the ‘Yes” campaign are saying don’t fret, that’s fine, we are self sufficient in food, because of fish and because of our farming. We have a huge whisky industry, we’ve got a tourist industry, and of course we’ve got liquid black gold, oil. That’s the ‘Yes’ campaign saying the economy will be fine. Don’t scare us, you horrible ‘No’ people. The ‘No Better Together’ campaign people say no way. Your economy is too small. It will rely much more for its income on oil than the rest of the UK economy does. Therefore, if oil isn’t as plentiful as you are predicting, or if the price of oil falls, you’re going to stuffed. So that’s where we are in the macro-economy . But of course you then start delving into the detail, and you can argue the toss either way, and it all gets very interesting.
CHRIS MANN: So what about all that oil and gas? The SNP have said for years, ‘Scotland’s oil.’

ADAM KIRTLEY: It has. One of its central planks of its pro-independence stance is it’s our oil, we’ve got lots of it, and we want to keep the revenues to spend on the Scottish people, not fritter it away, as the ‘Yes’ campaign says, as the UK Parliament at Westminster has done. Now several experts, including a very eminent oil expert with many years experience, have questioned whether that oil is as much as the Scottish Nationalists and the ‘Yes’ campaign says it is. In other words, is there as much physically, is there as much oil there under the North Sea and west of Shetland, as the ‘Yes’ campaign is saying? But even if there is, and that is debatable, even if there is, you can’t predict, say the ‘No’ campaign, the revenues you’re going to get for that over the next ten or twenty years, because the price of oil goes up and down. And if it was to fall sharply, and a smaller Scottish economy relied hugely on that oil revenue, that could completely stuff it, and effectively the country could suddenly go bankrupt. The ‘Yes’ campaign says that’s scaring and that’s nonsense.
CHRIS MANN: Well in terms of scaring, they’re saying jobs will go, no they won’t. What are the pros and cons here?
ADAM KIRTLEY: In the Referendum White Paper, Alex Salmond, the SNP Leader of course, he says ‘we have the people, skills and resources to make Scotland a more successful country.’ The ‘Yes’ campaign has looked at various studies that it chooses to look at presumably, saying that actually the economy has done better, or is better, than the UK economy. Other people say no it’s not. You actually get subsidised to the tune of about four billion pounds, or over a thousand pounds per person, every year. So it really depends on which side of the coin you’re on as to whether you think the economy would be better or worse, post-independence.
CHRIS MANN: Now that currency debate. The pound, the euro, the Scottish something or other, what exactly are the options?
ADAM KIRTLEY: Well this is the tricky one Chris, because Scotland, the ‘Yes’ campaign, say they want to keep the pound, and we want to keep a currency union that will give us influence over Bank of England policy. And Westminster parties, and I suppose one can say you could see why, have said well no, hang on a minute. You want a divorce, and then you want to come round for Sunday lunch. Well you can’t. If you go it alone, you will not have influence over the pound. You can use the pound. Russia can use the pound if it wants to. You can’t stop them. But without any influence over policy, Scotland would have to have massive reserves, as it would need if it created its own currency Chris, to be able to be viable as an economy, to be able to borrow on the markets. If you’ve got nothing to back up your currency, nothing to protect you if that currency, through no influence of your own, goes one way or t’other, then you are going to find it very very difficult. So the ‘No’ campaign says you can’t have the pound and have influence, it’s dangerous to have the pound with no influence, or your own currency with no reserves. What are you going to do? And the other thing is if Scotland rejoins the EU as a new member, which as a new country presumably it might be defined as, then it has to join the euro anyway.
CHRIS MANN: That’s our reporter there Adam Kirtley, our business reporter, with the latest on the economic front.

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