Economics of Independence

Leading economist Sir Donald Mackay backs independence: Scotland will be better off

01_S06MACK_1080007kIn a major boost to the campaign for a Yes vote for independence, former Chair of Scottish Enterprise Professor Sir Donald Mackay has set-out the economic benefits of an independent Scotland.

In an extensive article, published this morning, Professor Mackay analyses the substantial benefits of Scotland controlling its own resources, especially offshore revenue.

He builds on previously criticism that the UK Government is ignoring “a mountain of black gold” in this sector, revenue that would of course go to an independent Scotland. Reports at Investors Chronicle suggested that the Westminster politicians were doing so to undermine the case for independence.

Alongside Professor Mackay’s financial analysis, he confirmed on BBC Radio Scotland this morning that Scotland would be in a stronger financial position than the UK going forward. This is a highly significant intervention from a figure with considerable experience in enterprise and economic research.

Professor Mackay’s intervention

Key extracts from Professor Mackay’s intervention today include:

1) “I begin with the macroeconomic framework which an independent Scottish Government would face and suggest that its fiscal position from 2016 would be very much strengthened by the likely future path of North Sea output and tax revenues.”

2) “The Treasury’s basic premise, that an independent Scotland in 2016 would inherit a chronically weak fiscal position, is unsustainable.  It would be easier for Scotland to live within the fiscal rules, because the likely future direct and indirect impacts of North Sea oil and gas would be much greater than the Treasury suggests.”

3) “The OBR is also hopelessly at sea when it comes to forecasting the price of oil.”

4) “On this basis a well prepared Scottish government would be able to implement the main supply side reforms contained in your white paper and fund that process within the fiscal limits which would be imposed by symmetric fiscal rules.  As for Project Fear, I am sure you will make good use of the words of the American president who said, in the depths of the deepest recession ever faced by his people, that `the only thing we have to fear is fear itself’.”

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About the author

Michael Gray

Michael is Head of Research with Business for Scotland.

A graduate from the University of Glasgow, he has carried out a series of interviews with academics, politicians and the public in Denmark, Iceland and Ireland. Michael's on twitter @GrayInGlasgow.


  • […] tank. The professor really has advised governments and trade bodies, he’s probably still, even having come out as a yesser, on the speed dial lists of everyone who is anybody within the power structures of both Scotland […]

  • So, according to the BBC Scotland website, Ewen Stewart is quoted as saying the following [and thus I’ve added my comments]: “It’s overwhelmingly in Scotland’s interests to use sterling. Seventy percent of Scottish trade goes to the rest of the United Kingdom.”

    But he added: “The major political parties in England have said that isn’t an option and, to be honest, if you’re going to separate, you can’t expect to keep the good bits.” [why can’t we keep the good bits, rUK expects to do so, how about some quid pro quo here?]

    Mr Stewart, who opposes independence, has written a paper for the Scottish Research Society arguing that if Scotland rejoined the EU and had to comply with its compulsory annual borrowing limit, every household in Scotland would be worse off by £3,400-£5,500 a year, plus another £500-£1,000 a year for every £100,000 borrowed on their mortgage. [really?]

    “You could shadow the pound, there’s little doubt about that, and that is seductive as an argument and it may well work for a period of time, until it doesn’t,” he claimed. [so obvious that one, something “works until it doesn’t”, just like banking eh?!]

    “The problem is that the Scottish economy is actually highly cyclical. [and is the UK any less cyclical at the moment with oil, public sector, and banking?]

    “It’s dependant on three big sectors: the public sector, just over half the entire economy; oil, we’ve all agreed, is highly volatile; and the banking sector.” [really, everyone has agreed?]

    He added: “If they do use sterling unofficially, the would be forced to mirror monetary policy in England and not only that, if there was a shock in England that shock would be magnified throughout the rest of the country.” [how insightful, and that hasn’t happened to us as the UK on the whole since 2007 crisis?!]

    And this man calls himself an economist!

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