Currency Economics of Independence Westminster Mismanagement

The road to prosperity through independence

Scotland can create a robust roadmap to prosperity but only if we first reject the xenophobic, delusional Brexit power trip that seems to have gripped half of the UK population.

Independence is a means to an end, and not an end in itself unlike the hubris driven hard Brexit plan. With that in mind Business for Scotland met with the Scottish Government’s Scottish Growth Commission officially on three occasions and communicated our detailed, positive economic vision for Scotland as an independent nation. We believe that independence, coupled with a new positive and inclusive approach to economics, offers more security, shared prosperity and faster growth potential than post Brexit, xenophobic isolated Britain ever can.

So I thought it would be useful to outline the top five ideas we put forward that form the foundations of our roadmap to prosperity through the powers of independence.

1) We need to elevate economics towards a higher purpose than narrow, greed-driven stock market and GDP growth as a measure of success. Westminster offers lip service to shared prosperity, but fails to recognise that the purpose of economics should be the distribution of assets and wealth for the maximum well-being of all in society. First, we need to agree a national set of values to aspire to. Our suggestions: Fairer distribution of wealth, improved welfare, better management of our natural resources to reach environmental sustainability, better education and employment opportunities for young people and higher R&D and skills investment. Boosting our society’s feeling of wellbeing, including life-expectancy and happiness.

Yes, we should measure GDP growth as one factor but economic performance measurement can’t just be growth related. It needs to include productivity, balance of trade, long-term national debt levels and wage growth to be more inclusive.

Once you have defined a set of values and measures by which you can judge the true progress of a nation, you can define the policies that will deliver that true progress.

2) We want Scotland to remain a member of the EU, but if that is not instantly/seamlessly achievable then single market access is a must, with an option to rejoin the EU as an independent nation if the Scottish people see fit. EFTA or EEA membership is an acceptable way to trade and would be far better for Scotland and our business community than staying with the UK post brexit. Westminster’s hard Brexit will cost tens of thousands of jobs in Scotland, knock billions off our economy, create rapid inflation, increase borrowing and the deficit, damage our international exports and cut real wages leaving more and more Scottish people living below acceptable economic standards. Independence will offer many trading and foreign direct investment advantages — the scale of which will become evident as the terms of Brexit become clear by autumn 2017.

3) Currency: In 2014, the then strength and stability of the pound and the wish to make independence a smooth process meant that the offer of a currency union was sensible. However, a policy that your opponents can just say no to was not ideal politically. Now the pound has lost 16 per cent of its value, become volatile and is expected by many to drop to parity with the Euro/Dollar during the Brexit negotiations. Sterling post-Brexit is no longer a viable candidate for a currency union it is now advisable to create an independent Scottish currency, our own central bank and a series of investment banks to invest in high growth potential sectors such as biotechnology, renewables and information technology. Full monitory policy control including the use of quantitative easing to invest in growth, not to boost asset and market values as the UK did, offers more value to Scotland in the changed circumstances than a currency union.

4) Oil and gas: In an independent Scotland there must be openness and clarity over the tax policy relating to the North Sea taxation and that would mean benchmarking taxation against that of other comparable countries such as Norway who generated £17 billion more oil and gas-related revenues that the UK last year. The UK Government gave massive tax breaks to companies such as Shell and BP, but Shell who took £81m in tax rebates from the UK Government in 2015 managed to pay £11bn in dividends to shareholders, the world record, last year. A complete review of the oil and gas sector and its future must be carried out in the time between an independence vote and independence day and that review must not be led by a unionist oil industry insider.

This review must include the fact that the West Coast of Scotland may have oil reserves that are yet to be exploited, currently the UK Government allows no West Coast exploration due to nuclear submarine activities. An independent Scottish Government should allow West Coast exploration. It should also consider how to maximise future revenues for the benefit of the nation, treat oil revenues as a bonus and a fund to invest profits in securing Scottish services, pensions and in renewables so that over time we can turn the North East from a world centre of oil and gas expertise into the global leader in renewable energy.

5) Benefit Corporation Tax Credits: An independent Scotland could create a uniquely competitive corporation tax system. Rather than cutting corporation tax like the UK a simple credit based system allowing companies to earn tax discounts through activities that drive shared prosperity should be introduced. Tax credits can be earned through targeted investment and corporate behaviours that create a better fairer more prosperous Scotland and increase overall Government revenues while allowing corporations that benefit Scotland to reduce their direct taxation.

Credits could earned by paying the real Living Wage, thus creating savings on Government benefit payments and increased NI and PAYE tax contributions thats would be worth £1bn a year. Increasing exports to improve Scotland’s balance of payments. Spending more on applied R&D, raising R&D spending in Scotland from 1.8 per cent of GDP to three per cent over five years would add £12bn to Scotland’s GDP. Prompt payment of invoices to SME’s (30 days or less) would increase SME business turnover by between five and 10 per cent a year and increase the speed of investment in Scotland’s real economy, creating tens of thousands of new jobs.

If big business could be persuaded to invest in areas that deliver the social values and growth aspirations of our independent Scottish economy while increasing overall Government revenues then taxation policy can be used as tool to deliver the elevated economics that many aspire to but feel can’t be delivered by old-fashioned Westminster big corporation sycophants.

About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland he ran a small social media and sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and The Huffington Post.

5 Comments

  • As the Scottish government’s borrowing is restricted could investment banks be established now to fund infrastructure projects which in turn boost the economy in several ways? If we can, we demonstrate what is possible before the next ref vote.

  • excellent set of objectives –
    are you proposing infrastructure QE aka Prof Richard Murphy ?

    • Thanks and yes we supported that way before it became trendy – we also se QE as a tool to bail out consumers and not just the banks.

  • Great, clear piece as always. Particularly like the part of values and measures to track a nations progress. Truly believe that the economic policy should be linked to how well our population is thriving. It also sends a message to the world of how we want to do business.

    Off to share this!

Leave a Comment