Sounds like May’s Brexit wish list...
The SNIP
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Sounds like May’s Brexit wish list...
Doon frae Troon
Ryder Cup Winner
I'm sometimes wonder if a reporter asked Ghandi 'what currency will you use and what about the borders' when he did his walk across India.
597 is mainly waffle. Hughjar's 599 is far more considered. Although I'd question the accuracy of his assumption on the deficit, he's right on non-returned tax revenues. However, if you include private sector raised tax revenues, not included in the IFS figures, which are very close to the GERS report, the GDP drops from -7 to -4.8.
That 4.8% isn't a million miles away from the 3% needed to meet the EU financial criteria for membership, and I'd expect that to be achieved with sensible realignment. Personally, I'd put a solid tick next to EU entry apart from the issue of monetary policy control when sterling interest rates would be controlled by the BoE, i.e. outside the EU.
Sturgeon has already addressed the issue by saying Scotland would have its own currency within a few years, and the best way would(probably) be to shift to the Euro. You could call it a transition period... sounds familiar??
The current issue, not widely reported, is Scotland's recent cap in hand to the UK Treasury for the almost £1bn overspend on top of its expected overspend. Being that far out on the budget, as a percentage, is at best clumsy - lets not call it vote buying. Quite how that would fit in with the EU remains to be seen. Would Scotland be a net receiver from the EU? Would Scotland be straight jacketed like Greece, and more recently Italy? Who knows.
One thing is for sure, oil revenue shouldn't be considered the be all in cushioning Scotland's finances. The oil price, courtesy of the US and Canada's shale oil production, won't ever be that profitable again. And if sanctions are lifted on Iran, as they briefly were a few years ago, expect Iran to flood the market with cheap oil again, driving down oil prices as it did 4 years ago.
On the share of the UK's debt; that would be offset by Scotland's share of the UK assets, just as the UK is to receive a share of EU assets once it leaves the EU. Quite how that equation will square up, who knows. However, what would be extremely risky for Scotland would, as a number of SNP politicians have suggested is to walk away from that debt. A country reneging on a debt would see lending interest rates causing immense problems for Scotland's economy - I'd hazard a guess that's just SNP posturing as it would be worse than stupid to do it.
PNWokingham
Journeyman Pro
and good luck with that Brian - but if i was a Scot i would want a lot more info from the Scottish Government and also from Westminster as the situation with the debt is at the heart of everything - as is currency. If Scotland voted out and wanted to use the pound that is fine - same euro, remnimbi or dollar - but they would have zero say on anything to do with monetary poilcy by the owners of these currencies. Similiary, i woukld also look to a clarification statemnet from the EU on criteria for entry, especially relating to having a currency and budget defecits
PNWokingham
Journeyman Pro
there are no answers in there - you think because that oil revenues from Scotland 40 years ago exempt you from taking a share of the Union's debt - dreamland and not even worth saying any more. And, the UK spends 2% of Defence not 5%.
PNWokingham
Journeyman Pro
you are welcome to have your pound but it will need to be an internationally recognised currency and i have seen nothing to suggest that - you can make your own currency, you can even peg it to sterling but you will have zero say on UK monetary policy - that is a fact
drdel
Tour Rookie
If we assumed the SNP succeeded with Independence and EU membership, then IMO...
Currency:
EU would require adoption of the Euro and ECB rules. The current 5% over-spend would be required to reduce to 3% within a specified period, a hard 'top slice' drop of 50%.
Scotland would need to pay their contribution the Brussels; EU may provide a rebate but their own budget is under strain.
Deficit:
Above EU's membership expectation - may need to be reduced before admission which would be hard as it is caused by systemic problems.
There would be a need to meet the NATO commitment and / or do a deal via UK that would still come at a cost.
Need to repay/adopt portion of UK debt - further frustrates EU 3% limitation.
EU:
Membership is likely to come with proviso on finances, deficit control etc a per Italy, Greece etc
EU control of forestry, fishing, oil/gas ... and in longer term tax rates as harmonisation progresses
Border
Border controls necessary with capital and operating costs and tariff with UK on the 75% exports reliant on the UK-EU 'deal'.
Air Traffic control management required.
Fishing:
Under EU control thus permitting Danish and Dutch access that have very 'efficient' factory ships against which Scottish fishing would have problems competing.
UK Assets:
Actuarial issue that would see trade-of with assets on Scottish soil - unlikely to help with the annual overspend.
IMO the economics would be painful for some considerable time for Scottish residents since the budget issues are deeply embedded so would inevitably cause public services, education, health and infrastructure to be drastically reduced and/or income and corporation taxes to rise.
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Kellfire
Blackballed
Are you an adult? Just wondering.
PNWokingham
Journeyman Pro
good points. On currency, if Scotland believe that it can just be a sterling user until they can join the EU, they would need this commitment from the EU as i am not sure the EU would let anyone in without their own currency - and any agreement should be made public as part of any vote as it is core to what they are promoting. Not sure how they would do the euro-isation of a country based on echchange rates that have nothing to do with that country
And on the debt - they would not be able to "adopt" any of the UK debt as that would be illegal under the bond covenants - no creditor of UK Gilts would ever agree to changing to borrower from UK to Scotland. They would have to borrow on their own merit - but again, the amount and reality of doing so would also be impossible to any international lenders as the country likely wouldn't have a cureency and a very poor fiscal position and no track record
chrisd
Major Champion
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Even if they could borrow, given their Level of indebtedness, wouldn't the interest rates be prohibitively high ?
Even if they could borrow, given their Level of indebtedness, wouldn't the interest rates be prohibitively high ?
They could try wonga loans ??
so all the Tax rev from the O&G ind for 30 years didn't go straight to westminster?
happy to take the taxes from Scotland for the last 300 years?
Doon frae Troon
Ryder Cup Winner
So currency is the only thing Scotland has worry about after your 'cutting ' assessment.
I think we shall do just fine as an ordinary independent country.
MegaSteve
Tour Winner
So currency is the only thing Scotland has worry about after your 'cutting ' assessment.
I think we shall do just fine as an ordinary independent country.
The sadness is your intention to not remain independent...
Tax Rev from Scotland equates to 8% of UK total tax revenue. Scotland expenditure equates to 9.3% of total tax revenue.
Only Northern Ireland receives more expenditure per head.
I wonder what the tax rev for the City of London is compared to North Sea oil and gas?
Kellfire
Blackballed
Tax Rev from Scotland equates to 8% of UK total tax revenue. Scotland expenditure equates to 9.3% of total tax revenue.
Only Northern Ireland receives more expenditure per head.
I wonder what the tax rev for the City of London is compared to North Sea oil and gas?
You are of course right but imagine if money was actually invested proportionately outside of the south east instead of just plugging holes. When they do attempt it, they balls it up. HS2 anyone?
drdel
Tour Rookie
Prof McClaren at Glasgow Business School reckons it would unsustainable along the lines I mentioned earlier. He also suggests the SNP are well aware of the disaster it would cause.
“Scotland would have to do without a lot of money - unlike the UK, which will save money as a net contributor if it leaves the EU.
“Scotland has been a net beneficiary since North Sea oil revenues have dried up. Independence would therefore lead to austerity.
“The Scottish government would have to plug the hole in the budget that would be caused by the exit.”
“Proponents can always claim that the economy would benefit from independence.
“Scotland’s problem would be tax revenue. Scotland would lose £10 billion in Britain’s annual transfer payments.
“This corresponds to ten percent of the Scottish budget. How can the Scottish government rebalance the budget?
“Scotland would have to do without a lot of money - unlike the UK, which will save money as a net contributor if it leaves the EU.
“Scotland has been a net beneficiary since North Sea oil revenues have dried up. Independence would therefore lead to austerity.
“The Scottish government would have to plug the hole in the budget that would be caused by the exit.”
“Proponents can always claim that the economy would benefit from independence.
“Scotland’s problem would be tax revenue. Scotland would lose £10 billion in Britain’s annual transfer payments.
“This corresponds to ten percent of the Scottish budget. How can the Scottish government rebalance the budget?
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PNWokingham
Journeyman Pro
what has past tax revenue got to do with anything - we have probably been subsidising Scotland for most of the Union but that has nick all to do with plans going forward
PNWokingham
Journeyman Pro
So currency is the only thing Scotland has worry about after your 'cutting ' assessment.
I think we shall do just fine as an ordinary independent country.
you have plenty to worry about if there enough gullable to support independance with no idea of how you survive.
PNWokingham
Journeyman Pro
tbh Chris - if they leave without sorting out the debt - and no idea how they do that - and if they manage to have a currency - and if they have a 5%+ budget defecit - they will struggle to borrow as the sums do nott add up. I am not having a go at Scotland and if they want to go i would not lose sleep although i would rather they stay - but they willhave foooled the public into doing something that is so mad on any level of analysis that Wee Jimmie and the Krankie cronies should be jailed for deception
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