Scotland is home to a unique combination of assets with which to build a prosperous and wealthy nation.
Medium sized European nations such as Norway, Sweden and Denmark are among the most prosperous countries in the world, well ahead of the UK. Scotland shares many similar economic features with these countries. This shows immense growth potential for Scotland.
There are 5 key areas that are vital contributors to growth and development in a country. To achieve prosperity, a nation with natural resources, a skilled population, access to trading markets, well functioning products, and sectors to trade with, and a supportive financial services system gives a country the capability to boost its economic growth. Scotland has all of these in abundance.
With independence, Scotland will have the ability to become a more prosperous nation. It will have the power to create much needed bespoke and sustainable economic growth strategies.
1) Prosperity Requires: Natural Resources
Scotland is a Resource Rich Country. It has enviable levels of tidal, wind and wave energy and a focus on research has resulted in influential developments within the renewables sector. Scotland has the world’s most advanced open access offshore wind turbine dedicated to research based in Fife Energy Park. In line with this, the UK’s flagship technology innovation and research centre for offshore wind, wave and tidal energy ‘Offshore Renewable Energy Catapult’ is based in Glasgow.
Evidence of Scotland’s advancements within the renewable sector can be seen across the country with the level of wind energy generated in 2015 being almost 7 times 2006 levels of 14,136 GWh. Scotland’s technological capacity as well as geographic location makes the country an ideal centre for renewable energy, an advantage that many countries want to take part in, especially in Europe which Scotland supplies 25% of its offshore wind resources too.
In 2016, wind turbines were able to supply the electrical needs of 87% of all Scottish households, equivalent to 2.1 million homes. This was a significant leap from the previous year in September 2015 of 36%. Earlier this year, the wind capacity was also so high that for the first time ever recorded, there was a sufficient supply of wind and renewable technology in two days to generate output for all of Scotland’s electricity needs for the day, peaking at 127%.
However, the recent changes to subsidies for the renewable sector by the UK Government will cause detrimental effects to the industry. The decrease in subsidies for onshore wind, the cheapest form of renewable energy is particularly troubling especially as the decision was made by Westminster without consulting either the industry or the Scottish Government first. Westminster has the capability of ‘pulling the plug’ on Scotland whenever they wish, to the detriment of Scotland’s economy and it’s future as a greener nation.
North Sea resources if organised in a manner that benefits the people of Scotland, rather than just companies, by forming a Sovereign Oil Fund as they have in Norway, will be contribute to building an economically stronger nation.
Scotland has vast fishing stocks considered one of the richest seas in Europe. 20% of the EU’s fishing comes from Scottish waters. The country also has a vast amount of clean, fresh water and beautiful landscapes which contributes to it’s thriving tourism sector.
There are very few countries in the world with such a diverse range of valuable natural resources, and as a resource rich country, Scotland has immense potential to boost its economic development.
2) Prosperity Requires: A Skilled Population
One of Scotland’s most valuable resources are it’s people. With successful universities (5 in the world’s top 200) and colleges, Scotland has a capable and educated population with boundless potential. In 2013, the Office of National Statistics (ONS) recorded Scotland to have the most educated population in Europe with 45% of the population aged 25-64 with tertiary education attainment. In the same year, Scotland also had the highest proportion of its population in the world going into higher education.
Universities and colleges in Scotland produce high quality research and teaching which attracted 51,105 international students to Scotland in 2014-15. However with Brexit, there is a risk that studying in Scotland will not be as attractive to the much needed international students that contribute to Scotland’s economy.
Investment in education is a long-term investment in the wealth of a country, which Scotland has a strong foundation to build on as an independent nation in the EU.
3) Prosperity Requires: Access to Trading Markets
Scotland is well placed for trade. It has a strong trading relationship with countries across the world, especially the United States which accounts for 14.5% of Scotland’s international exports worth $4 billion in 2014.
Most of Scotland’s exports (64%) goes to the rest of the UK. This is due to the fact that successive UK governments since Margaret Thatcher have sought to maintain a strong pound to support the financial services sector (mainly based in London). This has forced Scottish business to trade more with the other UK nations as other countries have not been able to afford Scotland’s exports. Consequently many Scottish-based manufacturing businesses were put out of business and those that survived were forced to focus on UK trade rather than establishing trading partnerships with the rest of the world. So currently with the collapse in the value of the pound, or with an independent currency, Scotland has the potential to increase international trade and rapidly expand its exports to the European Union (assuming membership) beyond its 42% (of international exports) due to its extensive services and access to trading markets.
In terms of trade – with the USA, the EU and with the rest of the UK – an independent Scotland with membership of the EU single market is in a strong position for further future expansion. An independent Scotland should maintain good partnership with its neighbours, yet decrease their dependency on the rUK by increasing exporting across the world and making the most of future opportunities as a member of the EU.
4) Prosperity Requires: Excellent Sectoral Clusters and Products
In the 21st century, Scotland will compete on quality within the global economy. Countries such as China and India and other comparatively low wage economies will produce the cheapest goods, so Scotland must focus on output that cannot be reproduced. Fortunately, Scotland already has a substantial number of globally renowned sectors and products that are popular in the global market.
Scotland’s strengths in areas such as whisky, life sciences (biological and medical), research and development, renewable energy projects, electronics, textile design and the games industry are competitive advantages in growth sectors. Improvements within these fields have created economic benefits such as Scotland’s Gaming Design industry which has grown by 600% in the past five years. The Edinburgh – based Rockstar North also succeeded in making their game, Grand Theft Auto, the best-selling video game ever.
An independent Scotland can expand on this and boost industries in Scotland by creating an environment where small and medium sized businesses can grow.
5) Prosperity Requires: Extensive Financial Service Systems
Scotland has many institutions which can handle large scale financial projects, expansions and investments. Outside of London and the South East of England, Scotland is internationally recognised as the most important financial centre in the UK.
The financial sector makes a positive contribution to Scotland’s economy as a whole. This is accomplished through its direct economic impact from financial services and also it’s employment. In 2014, the finance and business services employed 226,700 people in Scotland, representing 8.9% of employment.
With Brexit on the horizon a major opportunity for an independent Scotland within the EU will be an attractive hub for financial services as businesses that may need to relocate from London. Due to the attractiveness of the location, cultural similarities, language, existing highly devoted skill sets and the fact that both the cost of living and wages are lower in Scotland and that office rents are on average 60% less expensive in city centre Glasgow compared to the City in London. Some commentators have suggested that an independent Scotland within the EU could attract 50,000+ financial sector jobs from London and the South East of England.
Although Business for Scotland acknowledges the importance of a financial sector, an independent Scotland should also consider the importance of prioritising other sectors, such as manufacturing. That way, the Sterling will not be kept too high to solely support the finance sector. In line with this, there should be a focus on sustainable banking as Ailsa Gray writes in her article ‘Scotland’s Compassionate Capitalist Legacy’.
Prosperity Needs Independence
Scotland is almost unique in the developed world in having all the ingredients that contribute towards the creation of wealth without actually fully enjoying the benefits of it. Other medium sized European countries have used their strengths to become prosperous and successful countries. So can Scotland.
Yet Scotland still lacks the final factor for economic success: self-governance.
Independence will mean that decisions on tax, labour rights, migration, industrial policy, trade and investment and social security will be taken in Scotland’s interest.
Westminster isn’t working. This has become evident, especially in recent months they remain without a plan on when or how to trigger Article 50 or how the UK will survive after Brexit. With independence, Scotland will have the powers to improve the economy and create more jobs for the benefit of Scotland and the people of Scotland. That is why Scotland would thrive as an independent nation.
Written by: Michael Gray, Updated by: Tonie McKay