Scottish Independence: Weighing Up the Economics
Gavin McCrone
Language: English
Pages: 192
ISBN: 1780272340
Format: PDF / Kindle (mobi) / ePub
In autumn 2014, those living in Scotland will face the most important political decision of a lifetime: whether Scotland becomes an independent state once again, as it was before 1707, or remains within the United Kingdom will have profound consequences for everyone in Britain. This book explores the many issues involved in this important choice, including a key part of the debate that centers around the question of whether Scotland would prosper more or less after independence. How well off is Scotland? Would it have a faster or slower growing economy if it was independent? What currency would be used—the pound, the euro, or something new? What should its energy policy be? In this impartial and thought-provoking book, economist Gavin McCrone addresses these and many other questions, which are of vital importance in the run up to the referendum.
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The rest of the UK were in monetary union, there might be a Scottish member of the MPC but only so long as he or she had appropriate expertise and was not there just to represent the interests of Scotland. And, as the example of European monetary union shows, even representation on the board of the ECB does not guarantee a monetary policy that suits all members; inevitably the largest economies are those to which the bank has to pay most regard in deciding its policy. In Scotland’s case, there.
To participate in the proposed EU banking union, of which all other EU states (not only those in the eurozone) are expected to be members. So that could become an issue too. All of this is still at a very early stage but the participating countries will be required to hand over supervision of their banks to a European Banking Authority under the control of the European Central Bank. This is to be followed by a common means for winding up financial institutions in trouble and a financial backstop.
The blame. The bank had mounted a successful takeover of the much larger English bank, NatWest, outgunning a rival bid from Bank of Scotland, which had started the process. The takeover of NatWest had been a success and had been well conducted so that it yielded considerable savings. It had also extended its business worldwide, with takeovers in other countries, and built a huge new head office at Gogar on the outskirts of Edinburgh. It should have stopped there. It had quite enough to digest.
National debt Scotland was expected to take. And, after all that is settled, it would be up to the markets to decide what rate of interest had to be paid on Scotland’s share of the national debt and on any new borrowing. Since those who own UK debt would probably not be happy with a share of it simply being transferred, the mechanism would probably involve the Scottish government having to float its own debt for the amount to be transferred and then paying the proceeds to the UK government so.
It struggles with reining in its budget deficit, may become increasingly unpopular. If independence is rejected, however, there is a real danger that politicians at Westminster and officials in Whitehall may think that they can put away the files and not worry about Scotland any more. Proposals for increased devolution might then be shelved. That is quite a likely outcome but it would be a huge mistake. It would probably mean that the next time there was a big surge in support for independence in.