Economics of Independence Westminster Mismanagement

5 reasons Scotland would thrive as an independent nation

Written by Tonie McKay

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 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 its 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 its 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 its 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.

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Written by: Michael Gray, Updated by: Tonie McKay

About the author

Tonie McKay

Tonie is Business for Scotland's Policy Research Executive, and is an EU national who has chosen to make her home in Scotland, originally from Stockholm.

25 Comments

  • The above can be realised but only if scotland controls monetary aswell as fiscal policy. A currency and central bank is a necessity.
    This talk by Prof stephanie kelton I think hammers home the need for a sovereign currency..
    https://youtu.be/d57M6ATPZIE

  • Interesting article , reminds me of many such at the time of the last referendum

    Your premise and chart to support “5 Reasons why Scotland would thrive as an independent nation”

    stems from the link which cites the UK as in the top ten countries in the world , with NZ top , and Norway, Canada and Australia , ahead of us.

    Assuming the data collated was based on the UK average,amongst 65 million people, and Scotland in the UK is already a very nice place to live, Indeed the envy of many in the Uk with free education and a superior health service.

    I would reckon Scotland already is a tad above the UK average, so Scots are already in the top ten and your proposals might raise the bar , but whether anyone notices is debatable.

    You mention “20% of Eu fish stocks in Scottish waters”, Scots fisherman have already voted to come out of the EU , are there wishes to be ignored .

    Point 3 regarding renewables, is questionable one , as whatever happens constitutionally in Scotland the wind will still blow and the tide will come in every day.
    renewables are improving in capacity, but they still need a subsidy and will continue to do so.

    What I would like to read is a practical plan that can be put into action today and will involve utilising the resource that Scotland has aplenty, the self-sacrifice and diligence of its patriotic people.

  • I have to say that while ON shore wind power is one of the lowest cost methods of electricity production, lower than coal, oil, gas or nuclear, OFF shore wind power is one of the most expensive.

    OFF shore is even more expensive than the much criticised, and rightly so, Hinkley Point fiasco.

    Furthermore, the OFF shore project, when completed, will be several times the capacity of Hinkley so that is the additional cost to the UK public, by whatever means which is going to be levied. Significantly more than it would have been if Westminster had generated it by simply developing ON shore in England.

    We are talking about something like £40 billion pounds over the lifetime of OFF shore EXTRA money for electricity that the British public would have to absorb either through tax, domestic electricity bills or higher priced goods manufactured in the UK.

    And the higher price of UK manufactured goods, especially those of course where high amounts of electricity are required in their production will have knock on effect for exports.

    England could generate the equivalent capacity simply by raising their ON shore capacity to similar levels as all the other Western European countries like Scotland, Ireland, Denmark, Germany,Sweden Spain etc.

    It really is a matter of utter astonishment that Westminster should have embarked on this OFF shore project while their country, one of the best potential ON shore resources, remains virtually untapped.

    It is not the English NIMBYISM which is unique, all countries with ON shore wind farms have plenty of NIMBYs as well, it is rather the level to which Westminster has been willing to accomodate English anti ON shore NIMBYISM which is exceptional. Something which Europeans unacquainted with the ‘Green and pleasant land’ mythos find bewildering. One described it as: “It is like being Saudi Arabia and refusing to drill for oil”.

    So let us not be quite so enthusiastic about OFF shore wind production, even if Scotland, like Germany, is getting close to ‘using up’ its ON shore resource.

  • I can fully understand that the rUK will not be able to order ships from Scotland if we become independent, so why do the Westminster governments order maritime vessels from South Korea? One more point, ship building in Scotland will not die a terrible death if Scotland becomes independent, as the Scottish defense will need to be supplied with what ever vessels and armament that will be needed to secure our shore and land installations.

  • I may go off on a tangent here but we constantly hear about how the shipbuilding on the Clyde is reliant on MOD ordering aircraft carriers and frigates. If we seperate then England cant order their ships from a foreign country in Scotland according to them. What I find strange is why are we not selling more of these ships to our NATO allies. Surely it is good business sense to take orders from elsewhere as these ships are deemed to be the best in the world.We sell all the other weapons made here,to anyone who wants to buy them. Is there a reason as it doesnt make great business sense

    • The UK does order ships from foreign countries – the way they word it is that they have never ordered a major battleship… that is true but they don’t order too many major battle ships any more! Navel protection vessels have been ordered from other countries and the replacement for Trident possible the biggest military contract ever awarded will go to America.

      Anyway the Professor of Maritime business at Napier University says independence likely to boost ship building. http://www.scotsman.com/news/alf-baird-independence-can-save-scots-shipbuilding-1-3341895

      I ask you to consider over the last 30 years – has the union protected shipyard jobs on the Clyde?

  • Rachel, your words echo my words of a couple of years ago.

    However, if you delve into the annual GERS figures, ONS figures, Treasury figures over the past five years, then a decade and further back you will find your assertions above are based on nothing but politically strategic nonsense we have all been fed for decades.

    I fell for it and within a few days of rolling my sleeves up and researching for myself I was angry at having been so naive all this time.

    Regards.

  • The emphasis on “big finance” seems rather at odds with the advocacy of the strength of “smallness” (the wealth of small nations, etc). There seems to be some evidence that big finance is not very good at supporting the small scale. Scotland’s future economy depends on strengthening local economies and communities and big finance may not be what we need. See this interesting report from Co-operatives UK on “Ultra Micro Economics”:

    http://www.uk.coop/sites/storage/public/downloads/ultra-micro_economics_final_-_may_2014.pdf

  • These points are true, but then the same all applies to the UK remainder should it be a yes vote.

    And why is having large fish stocks a boon? A developed economy cannot be such by having a large agricultural/primary sector.

    I think Scotland could prosper as a sovereign state, but then it’s virtues as listed here are no different to other current advanced economies.

    • I think the authors point is that so many people seem to be saying that for some reason Scotland can’t prosper!

  • resources such as nucléaire coul

    Nucléaire energy

    should,we consider this as a viable option to energy consumption&exportation ,could an indipendant SCOTLAND fortake such an endevour,as a serious player on that stage

  • Rachel,

    The only restructing required to our public service funding is to repatriate the funds we tax payers in Scotland pay to the UK Treasury to fund things which we do not support or need as a country.

    At best the UK is guilty of benign neglect. Its focus is on the metroplitan south. The only big ticket items the UK government spends in Scotland is Faslane whereas huge public funds are used for Crossrail and HS2.

    A Scottish government will have the focus to invest in big ticket projects like the Lower Clyde to develop it as a global port. Thats sort of development is required to mark a sea change in our fortunes. Singapore has done it, and we must follow. Second city regions in most of northern Europe are flourishing global ports with a quality of life far greater than most of out folk have. Serious money has been invested in these ports and they are deriving the benefit. I think you need a bit more confidence in your self and your peers.

  • […] An independent Scotland will have a unique combination of economic assets to build a prosperous and wealthy society. Medium sized European nations like Norway, Sweden and Denmark are among the richest countries in the world well ahead of the UK. Scotland shares many similar features with medium  […]

  • This is all well and good, but focusing upon the dream ideals would make any nation potentially the wealthiest. This article also bases a lot of this on the current state of Scotland’s market and finance – with no surety that Scotland would be part of the EU and with a lot of the financial backing which allows free university tuition and healthcare, amongst other things, a independent Scotland would have to restructure the entire welfare system in line with (at least initially) reduced income/finance.

    This article is a bit naive if its thinking this will be the case any time in the next 50 years.

    • A bit of a rosy picture but none of what the article says is lies .. everything is there and the FACTS can’t be disputed.

    • Rachel I’m confused! Pray tell. Whose financial backing is paying for our free education, free prescriptions and the likes?

    • Glass half empty attitude, never helped.
      I sincerely hope that your attitude on your own life isn’t similar and your ambitions are still alive.
      Otherwise yours is a pretty miserable going, I feel for you.

    • Dear Rachel

      I have my own business that manufactures and exports to 50 countries so I hope you accept my experience on this. The article is not naive.

      In 20 years the union and its overseas embassies has done nothing, repeat nothing for my business to help us export and to employ people.

      This morning I just returned from Dubai and I challenge you or no voters to visit the oil producing countries of the UAE, Saudi Arabia, Oman, Kuwait, Quatar, Brunei, Norway. I can assure you that we live like pigs, yes (PIGS) compared to what these countries have done for their people yet we are much richer than some of them.

      The talk about currency and finance is absolutely garbage. My business trades in any currency the customer wants to pay us in and as long as it’s money that we can take to the bank we accept it.

      Let me give you an example, you have your own kitchen installation company and you give me a quote to install a new kitchen for £10,000 and I give you the contract. You finish the work and I say Rachel, sorry I don’t have £10,000 pounds but here is the same value in Euro or dollars, are you going to refuse it?

      Project fear are lying to our people through their teeth. I have invited many of them to visit my company and not one of them have accepted, so I’ll make you the same offer.

      If you or anyone from the no campaign visit my business and show my staff (not me)one tiniest thing that the union has ever done for us I’ll give you a job at £40,000 per year or I’ll make a large donation to project fear.

      One last thing, not one single company will leave Scotland if we vote YES, they will only leave if its not economical.

    • Hi Rachel,

      With facts being made into dreams, I guess you’re already a No voter. I hope you can make it to the Yes side.

      Meanwhile, the No Campaign are dreaming of hanging onto Scotland’s wealth in order to keep the UK afloat.

      Good luck.

    • Every silver lining has a cloud!

      I read your post several times and found nothing based upon fact (in contrast to the article).

      Stating something does not make it fact by either campaign but your statements are devoid of any evidence.

      It is very likely that the EU membership would be fast tracked. We have been members for 42years and align with all conditions.

      What financial backing for free university tuition?
      The Scottish budget will be stronger and more able to afford these choices. You make the assumption that we will continue to spend as per the Westminster model. If we do need to borrow then even at a higher interest rate it will still be lower in real terms than the false allocation of share for debt interest on money not spent in Scotland as at present.

      You must be the only person alive with the confidence to state the economic condition of any nation for a projected period of 50 years.

      To suggest the article is naive in a post devoid of any constructive assessment is an insult to the author AND to other readers.

      Once again we have a well constructed arguement laid out in an article attacked by…”you just can’t”

    • If Scotland can be deny Eu membership that means all Eu citizen living in Scotland must get visa applications for them to live in.So do you really believe Eu countries want that?

  • Hi There,
    I think it can be safely said that the Oil wealth we could have had has been squandered and it is important that we invest or spend the remaining amount wisely.
    My question relates to our potential renewable energy resources; what would you like to see to happen once this is underway? Can a renewable energy fund be set up and are there any estimated figures as to how much this could be worth?

    Many Thanks and keep up the great work

    Best Wishes,

    David

    • There is one other reason that almost everyone forgets and it’s simple and it’s also a huge reason the UK will fight toth and nail to keep control of Scotland
      Location Location Location
      Scotlands access to the North and the permission to travel our waters and airspace would have to be asked for by the UK and they wont like the idea of that much, they’re not used to asking for stuff especially from us poor wee useless articles up here in Jockland

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