Economics of Independence Scotland's Economy

Deutsche Bank the incomprehensible contradiction and the indefensible union


The Daily Record championing NO Campaign scaremongering

Deutsche Bank on the 13th of September last year claimed that a Yes vote would go down in history as a political and economic crisis for Scotland as big as the Great Depression in the US, has just published a report that states that Scotland is one of wealthiest regions across Europe and can make the case that it would prosper by seceding and going it alone.

The great depression headline was one of the most outlandish and frankly ridiculous scare stories of the whole independence campaign.  It came as part of the call from Downing Street for big business to come to the aid of the floundering No campaign, Deutsche Bank issued a statement that made it quite clear that Scotland couldn’t afford to go it alone and this was backed up by statements to the media that “the wish for independence was incomprehensible”, with Deutsche Bank’s global strategist Bilal Hafeez stating: “Independence would bring a depression to Scotland and possibly the rest of the UK.” It was, he continued: “Very, very difficult to make a case for Scotland flourishing as an independent country.”

In what can only be viewed as incomprehensible contradiction, the same bank this week issued a report entitled “Better off alone?” The Deutsche Bank report states that many of Europe’s most prosperous regions could be better off by going it alone and abandoning the nation states of which they are currently a part. I will have to write to them to thank them for clearing that up, I was under the impression that independence was incomprehensibly stupid and that my family would starve to death whilst our nation’s wealth slid down the black hole that is always created when a nation chooses democratic self-determination. No? OK, thanks for putting me straight.

Scottish GDP per head is 115% of UK average

Scottish GDP per head is 115% of UK average

As well as Scotland, the bank has identified regions in Spain, Italy and Belgium that could potentially benefit from independence. Apparently relatively rich parts of these countries have been required to prop up their less prosperous peers, with the prospect of lower tax burdens fuelling an appetite for home rule / independence. Fascinating stuff!

Along with Scotland, regions such as the Basque country, Catalonia and Navarre in Spain, Flanders in Belgium, South Tyrol and Vento in Italy could potentially be better off going it alone, as their GDP per capita (economic output per head) is far higher than the average for the rest of the country of which they form part. Scotland’s GDP per capita is 115% of the UK average says the report, once they had added in the oil revenues that Westminster governments like to exclude when talking Scotland’s economy down.

The report also says the risks of going it alone have decreased for smaller countries, as Eurozone membership has helped to “reduce some of the fundamental disadvantages that would otherwise be faced by countries such as Luxembourg, Malta, Cyprus and the Baltic states”. Ironically, if there is a threat to Scotland’s membership of the EU, it comes from the fact that we are part of the UK that, as I demonstrated a few weeks ago, is heading for Scottish Parliament already paid for!the EU exit door when Scotland will probably vote heavily to remain.  To be fair the bank also noted that setting up a new administration, including separate defence and diplomatic spending, “naturally comes at a price”.  Well we know that, but with the Scottish parliament already built, a separate tax collection agency being created and an already stand alone NHS (albeit with a budget set by Westminster policies) such costs are less of an issue for Scotland.

This would mean that according to Deutsche Bank, in five months when Scotland’s largest natural economic asset halved in price, our economy went from being completely unable to afford independence to being one of the regions in Europe that can make an economic case for independence. I hope they don’t read the comments of OPEC’s Secretary General Abdulla al-Badri who announced recently that the oil price may have bottomed out and who predicted “you will see more than $200 when it comes to future oil prices.” They will probably announce that $200 a barrel will sink Scotland’s economy.  Sarcasm aside, al-Badri knows that if the problems in the Middle East aren’t solved soon, especially if oil supplies from Lybia and Iraq, both countries under attack from militants were interrupted, then oil prices will sky rocket.

Deutsche Bank’s “great depression” scare story or even The Economist’s “Skintland” weren’t all that effective as they were so obviously over the top that many people recoiled from the message. In one debate during the referendum one of my opponents, a well known Tory business supporter and Edinburgh old school tie type, recognising that he was losing the room, rose to his feet and with genuine anger and hatred in his voice pointed a shaking finger at me and shouted:“Does Gordon not understand where nationalism will take us, does he not know that they only survived by eating the bodies of the dead in Leningrad?” That’s the dark road that a yes vote will take us down.”

To the well informed these clearly incomprehensibly stupid statements of non-facts actually backfire: during the Leningrad rant I watched an audience member in the front row remove his “Better Together” lapel sticker. The problem isn’t that we were lied to or manipulated, or even that some debaters completely lost the plot and the debate. The problem is that after all this time commentators outside Scotland (and some in Scotland) still completely misunderstand the reason that the movement is thriving. The reason that support for independence doubled in Scotland over the last couple of years isn’t because we are wealthier than the larger controlling entity, it is that the larger entity is “controlling” and that our values are evolving into a more enlightened approach to economic growth, one that includes the creation of a shared prosperity that seems to be rejected by the Westminster parties. What Deutsche Bank has failed to grasp is that it isn’t our extra GDP per head that is driving our nation towards independence. It is our growing and shared aspiration to build a better Scotland, one that is richer because the people that live and work here are best placed to make the right economic decisions, but also one that is fairer and more inclusive that Westminster can imagine.

A few years ago independence was still a dream, it is now an inevitability, the die has been cast.  The scaremongering of the no campaign and its big business allies was one a one-time tactic and delivered nothing more than a Pyrrhic victory. Enough of our population my well have been put off voting Yes by the prophesies of doom and some were convinced (quite understandably) that The Vow gave them the chance to vote “not yet”.

However, the Scottish people have had their eyes opened, Westminster started to lose interest in the people of Scotland on the 19th of September and as a result the people of Scotland have lost faith in Westminster economics, big business and the mainstream media, and with Labour seemly locked in a Scottish death spiral, who can credibly defend the indefensible union when we ask the question again?

Business for Scotland – Building National Prosperity – Join us now

Further Reading:

Pre referendum Telegraph Rant: Scotland heading for a ‘Great Depression’ after a Yes vote 

Feb 2o15 – Acceptance (also in the Telegraph) that Scotland amongst top European sub nations to be able to make an economic case for Independence. The European regions that could be better off going it alone

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 Gordon ran a business strategy and social media, 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 Believe in Scotland.


  • Thanks — interesting piece.

    “Along with Scotland, regions such as the Basque country, Catalonia and Navarre in Spain, Flanders in Belgium, South Tyrol and Vento in Italy could potentially be better off going it alone, as their GDP per capita (economic output per head) is far higher than the average for the rest of the country of which they form part…”

    I have an question about the politics of autonomy/independence movements. Do you have any insight into why some tend left (Scotland, Catalonia) and some swing right (Flanders, Northern Italy)? Is there a pattern? It doesn’t seem directly connected to whether the region is richer or poorer. Please let me know if you have a general theory.

  • DB’s report is an objective look at whether independence is better or not for Scotland (and other countries/regions) and certainly does not say that Scotland would be better off alone. There’s also no mention of EU membership or the inevitable start-up costs for a new country.

    Here’s another quote from it: “..there are few reasons, from an objective point of view, why Scotland or Catalonia should gain a substantial degree of prosperity via independence”.

    I notice the link to the paper wasn’t included, so here it is for others to make their own informed view:

    “A few years ago independence was still a dream, it is now an inevitability”. I really don’t believe that’s the case – the majority said no. It wasn’t a fix or a con. Let’s make use of the extra autonomy we already have and those powers that are coming to us instead of wasting more years dividing our people and scaring off foreign investment.

    • Here is another quote from it “A glance at the EU shows, however, that many of the regions would not be such lightweights at all in comparison with existing members. In fact, in terms of GDP, Flanders and Catalonia even have bigger economies than Portugal or Ireland. The medium-sized regions of Veneto and Scotland outperform countries such as Romania and Hungary, and even the Basque Country has a larger GDP than nine other EU members.”

      Now compare that to “the wish for independence was incomprehensible”, and “Independence would bring a depression to Scotland and possibly the rest of the UK.” and it is “Very, very difficult to make a case for Scotland flourishing as an independent country.” No its not this report makes the economic case and puts a weak argument against it as most of the problems don’t apply to Scotland and demonstrates quite clearly that the first report was politically motivated scare story instead of the more balanced (but still not gospel) resort just published.

      The truth is if economic success was the key driver of independence then the UK shouldn’t be independent! The extra powers that are coming to us are not as good as with full blown self determination – so yes lets make the best of them and lets get as many as we can and move closer to the right way to run our country and that involves making decisions for Scotland in Scotland by Scotland.

  • Unbelievable that an organisation like this can be so contradictory, does this mean they have no idea what they are talking about?

  • I’m very pleased that BfS has picked up on this story – something that the rest of the pro-Indy websites appear to have missed despite its devastating demolition of the politically motivated lies by someone from the same organisation just before the referendum.

    I would hope that our pro-Indy campaigners for the Westminster elections will take every opportunity to remind everyone of this volte face by Deutch Bank.

  • This will have been in the BBC News headlines, yes? Like the first statement was. I must have missed it. Did anyone see it?

    • What BBC in Scotland broadcasting something radical as this, let me see “we need to see what our bosses in London think”

    • Since the referendum is past, an article indicating that we would be better off (or worse off) after independence is of little value.

      • No its not, it educates for future. Making informed decisions, not relying on MSM to misinform or just lie. We need to be much wiser for the next time. We failed to see the tsunami of lies and misinformation and WM ability to strong arm businesses to lie on their behalf. We know now.

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