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Scottish Independence and Scotland's Future
Economy & Taxation

Scottish Government makes economic case for Independence
21st May 2013

This document analyses Scotland's economy focusing on it's financial strengths, how additional levers could enhance the performance of the economy and looks at the economies of other small nations.

This documents looks at the following areas:

• An illustrated version of Scotland’s Economy Today

• Scotland’s Foundations

• Advantage Scotland

• Westminster isn't Working for Scotland’s Economy

• Independence – Scotland's Future In Scotland’s Hands

Annex A: Scotland’s Balance Sheet

Scotland can more than afford to be a successful independent country, as a paper published today outlines the nation’s key economic strengths.

The document, launched at Alexander Dennis in Falkirk by the First Minister and Deputy First Minister, offers a consolidated picture of the country’s strong financial foundations, diverse economy, ingenuity and natural resources – all of which will help ensure a prosperous nation with independence.

But it shows that rising inequality under Westminster and consistent economic mismanagement by successive  UK  governments is costing jobs and depressing growth.

Scotland’s Economy: the case for independence focuses on the country’s potential for growth as an independent nation, where the Scottish Government would have key economic decision-making powers.

The report highlights Scotland’s core economic strengths in the areas of :

  • Our financial strength – with Scotland having generated more tax per head than the UK for every one of the last 30 years

  • Our world-class food and drink industry which is seeing rising exports and the most recent annual turnover of £12.4 billion

  • Our thriving creative industries which are recognised throughout the world and have an annual turnover of £4.8 billion

  • Our global reputation in life sciences and an annual turnover of £2.9 billion

  • Our oil and gas industry, which is seeing record investment and which, in 2011, contributed £26bn to Scotland’s GDP and boosted the UK balance of payments by £40bn.

  • Our green energy reserves, with an estimated 25 per cent of Europe’s tidal and offshore wind resources.

  • Our tourism industry which employs almost 200,000 people

  • Our manufacturing sector, which exported £14.7bn in 2011

The paper concludes that Scotland has more than enough resources to become a wealthier and fairer country with the powers of independence.

Launching the paper, First Minister Alex Salmond said:

“This document sets out the enormous attributes and key strengths of the Scottish economy across a diverse range of sectors. We have a vast array of human, financial and natural resources, which many other countries do not enjoy.

“Scotland has a strong onshore economy and vast offshore potential, as well as a highly educated workforce and world class technology and research.

“But despite all of these inherent economic strengths, Scotland’s long-term economic growth has lagged behind that of comparable European nations, many of which do not have the natural advantages we do.

“The explanation for that rests in the fact that Scotland’s economic strength is not yet in Scotland’s hands.

“Despite our strong economic foundations and excellent global reputation Scotland, with Westminster in control of our economy , is not reaching our potential as a nation and this report clearly lays out the ways in which UK Government economic policies have not worked in Scotland’s best interests.

“We need the powers to boost our competitive position, support greater innovation and investment, become more internationally-focused instead of threatening to leave the EU and to become a wealthier, fairer country.

“Too many of the economic policies pursued by the Westminster Government are not best suited to Scotland’s priorities, and have held back our progress – and this report cites a number of tangible examples of UK Government policies which are damaging Scotland’s economy:

  • The decision of the last two Westminster governments to cut capital spending which would have supported an additional 19,000 jobs in Scotland

  • The UK Government’s failure to establish an oil fund for future generations, similar to the Norwegian fund now worth an estimated £450 billion

  • The decision by the UK Government to engage in a boom in credit and debt expansion, damaging the economy

  • Allowing income inequality to grow dramatically in the UK, to the point where the UK is now the 4th most unequal society in the developed world

  • The decision to concentrate economic activity in London

  • The decision to pursue austerity rather than focus on growing the economy.”

Deputy First Minister Nicola Sturgeon said:

“We have so much going for us as a country and as an economy: the resources, the talent, areas of real advantage and firm financial foundations. Our national balance sheet shows that for every one of the last 30 years Scotland has generated more tax revenue per head of population than the UK as a whole.

“That’s why even the leading opponents of Scottish independence say that of course Scotland could be a successful independent country.

“But we currently lack the full range of economic powers to help create jobs, grow the economy and realise all of that potential. Instead Scotland’s economic policy is largely determined by Westminster – often by governments we didn’t even vote for. 

“The UK Government’s concentration on London and the South-East of England, which the Prime Minister himself has called ‘unstable and wasteful’, has also worked against Scotland’s best interests.

“Westminster’s economic policies have seen the UK become the fourth most unequal country in the developed world. This document sets out policies to boost wealth while also reversing that trend of inequality, including our intentions to examine childcare costs to improve the opportunities for women to enter the workforce.

“It sets out the full range of powers and options that any future independent Scottish Government, of whatever party or parties, would have available to them. Scotland has got what it takes to be a successful independent country. But we need the tools to build that better, more prosperous and fairer country we all want to see.”

Rebuttal by Better Together campaign

In the last few days there have been several reports published which asked serious questions about the economic consequences of leaving the United Kingdom. We were promised that the SNP Government would respond with an economic strategy document. What we got was a flimsy 70 pages, a “booklet” as the First Minister described it.

Reading the document you are struck by the sense that even the nationalists don’t seem to know why they want Independence. Their high point is suggesting a cut to Air Passenger Duty. Is that worth breaking a 300 year old union with our biggest and most important trading partner? Is that it?

The whole nationalist economic argument is undermined by their failure to articulate a clear currency policy. The rest of the UK have made it clear: there is no guarantee they would agree to set up a Eurozone-style Sterlingzone so that Scotland could keep the pound.  Faced with this Alex Salmond won’t say what our currency would be. Yes Scotland are more honest: they want either a separate currency or to join the Euro. Both of these would be bad news for jobs and bad news business in Scotland.

But even if the rest of UK hadn’t rejected a Eurozone-style deal to keep the pound, the truth is that such a deal would mean that Scotland’s budget would have to be signed off by what would then be a foreign government in London. Why on earth would the rest of the UK allow Scotland to undercut their economy?

Scotland sells more to the rest of the UK than we do to the rest of the world combined. It simply doesn’t make sense to erect an international border between our businesses and their biggest market.

The great irony of today’s booklet is that the industries Alex Salmond rightly talks about as Scottish successes have been successful as part of the UK.

- The green energy growth in Scotland is backed by investment which is paid for by the energy bills of customers across Britain – we get about a third of the total investment but pay in just 10% in line with our population.

- The oil industry can squeeze every last drop out of the North Sea before it runs out because the huge decommissioning costs are underwritten by taxpayers across the UK.

- Our scientists and inventors are backed by UK funding – Scotland has received nearly double our population share of UK research funding. 

- The financial services sector which employs 185,000 people in Scotland (that’s around 7% of total Scottish employment) sells to the single UK market in financial services  of the almost 200,000 pensions sold by Scottish firms fewer than 20,000 were sold to Scots.

What all of these successes demonstrate is that when we work together we can better unlock our human and natural resources as part of a bigger UK.

In the last few weeks the questions have been piling up. On currency, on pensions, on mortages and savings there are serious issues that the nationalists must address. They ignored them all in today’s booklet.

Alistair Darling
Better Together

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