Economics of Independence Scotland's Economy

Leading think-tank: An independent Scotland would have been £148 billion better off

Written by Michael Gray

The Jimmy Reid Foundation, a leading think-tank, has released new research which proves that an independent Scotland would currently be recording a vast surplus.

The report, by former Scotland Office economists Jim and Margaret Cuthbert, references the Business for Scotland article ‘The accounting trick which hides Scotland’s wealth‘, which found that an independent Scotland would have been at least £50 billion better off as an independent country. Based on similar arguments and the principle of equity in the Vienna Convention, the economists conclude that Scotland is owed billions of pounds from this period and therefore should take a lower level of Westminster’s debt.

Cuthbert Surplus

Scotland would have an economic position similar to Norway’s had it become independent in 1980

The Reid Foundation analysis is based on Scotland’s strong tax revenues which have been constantly above the UK average. This means that Scotland’s wealth has drained into the UK Treasury for decades with a lower percentage of spending being sent back to Scotland through the Westminster bloc grant.

An independent Scotland would have been £148 billion better off

The staggering findings of the report consider the fiscal impact of independence since records were available. They conclude that an independent Scotland would have been £148 billion better off. Scotland’s financial position would have been closer to Norway’s, including a Sovereign Wealth Fund of over £100 billion savings.

The calculations make the case presented previously by Business for Scotland even stronger. The report states that “given the very high rate of inflation and associated high interest rates in the early 1980s, [the Business for Scotland calculation] is actually very conservative”. Even when taking into account that Scotland’s share of UK debt, Scotland would have quickly moved into a strong economic position and become one of the most prosperous countries in Europe and globally.


Previous Business for Scotland research found independence would have brought prosperity and no debt. The Cuthbert Report describes this as “conservative”.

Economic evidence illustrates an “improperly functioning union”

The report finds that across previous decades Scotland’s strong economic surpluses were wasted and propped up Westminster’s failing economic model. In the economic analysis, this defines the Westminster political system as an “improperly functioning union”. In this model, a centralised government unilaterally decides that revenues from one part of the union is used to fill a short-term fiscal black hole; no investment policy is designated for medium to long-term economic stability; and therefore, due to these revenues masking industrial decline, the entire union is left with crippling debts and liabilities.

The figures from previous decades illustrate that Westminster’s political and economic failure has squandered Scotland’s resources and left the entire UK with a debt mountain of over £1.3 trillion. This represents the catastrophic mismanagement of economic policy as well as a dysfunctional political settlement.

How this will inform the independence negotiations

Article 40 of the Vienna Convention sets out the protocols for dividing state debts on the principle of equity. This establishes a number of principles including the need for a fair division of assets and liabilities and the consideration of what created the state debt.

These figures demonstrate that Scotland was not responsible for the creation of Westminster’s debts. In fact it was Scotland’s surpluses that spared the UK from economic collapse. On this basis the Reid Foundation report says that Scotland should aim to fairly reduce its debt inheritance to a level far lower than the position of the Scottish Government suggests.


The Reid Foundation report highlights the dire economic incompetency of Westminster Governments over several decades and the wasted opportunity to transform Scotland’s economy.  While the past cannot be undone, this September provides  another opportunity to place Scotland’s resources and talents in our own hands.

Scotland remains in a stronger economic position than the UK as a whole. The only way that the resources of a wealthy nation can create a wealthy society is through controlling the economic powers of an independent state. Taking that opportunity can alleviate the impact of previous economic errors and move Scotland towards greater prosperity for its businesses and citizens.

Further reading:

Revealed: The ACCOUNTING TRICK that Hides Scotland’s Wealth.

Where does Scotland’s wealth go?

10 key economic facts that prove Scotland will be a wealthy independent nation

Join Business for Scotland – Read More

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.


  • I’ve been on the planet for 60 years – one sixth of the Union- and I can’t think of one ego political or macro economic event in which the UK has been involved where its position vis a vis other states has improved.

    Start from Suez and work your way forward and try and prove me wrong.

  • Scotland may well have benefited through the union and empire at one point but for too long the union has been nothing but an economic straight jacket which has left Scotland lagging behind other comparative countries.

    Scotland has been left with no other option than to grab the purse strings back from Westminster control and with more natural resources than other small wealthy countries we are perhaps better placed than most other countries who have claimed their independence in the last 70 years.

    Of course it will take good government to achieve the level of prosperity a lot of us recognize can be achieved, it will take time and there will be mistakes made along the way but that`s only natural when you add humans to the equation.

    It`s the constant lies, threats and smears towards Scot`s that will push more of us towards YES when folks self respect comes into their voting intentions.

  • I do wish we could have a good debate with honest people who can put true facts in front of us good and bad, then let us decide. Let’s have a tv programme that will give it the hours it needs to let us make a sensible way forward for our Country.

  • I would have to agree to an extent with David Archibald. The priority in the negotiations post yes has to be to achieve a quick, clean break where both sides are satisfied. Each party will have their own red lines. Whilst I imagine Scotland will be prepared to accept a “fair” share of debt the rUK will only agree to certain things if the Scottish definition fits with their definition of “fairness”. It would be bad for both parties if the future relationship was started on shakey foundations. I suspect arbitrarily (Vienna Convention is not ratified here) counting 30 years and adding in the elements of debt interest to significantly improve the final number would be too much for rUK to swallow. The argument could be made however to use the lower of the suggested figures banded about when it comes to debt share.

    • The Vienna convention is an UN convention drafted and signed by the UK and is binding on all UN countries. However, it is based on internationally accepted norms so either way it counts.

  • Although I’m leaning more towards yes in this debate I can’t help but feel the use of the last 20 or 30 years is a bit one sided but I may be wrong. Hasn’t there been years or decades even when we’ve benefitted hugely from the union? To suddenly reckon it’s somebody else’s fault particularly when there was Scottish hands all over the mess left by previous governments feels a little bit off in my opinion.

    • You have a point, however it’s important to view the situation in our current societal and global position. The last 300 years have been a whirlwind of change in our economic and social history. The last 30 years correspond to the neo-liberal consensus and the demise of the post war welfare state. It is during this period that Scotland’s perception of society has drifted from England’s. It is also the period where the current global economic system with regard to debt and financial regulation was formed and the period where UK borrowing has sky-rocketed.

      It is also clear that throughout the Union ordinary Scots have had a very hard time, through our involvement in Britain’s Imperial expansion, industrial revolution and land clearances. Even if the Scottish ruling class became rich through the Empire, it certainly was no great boon to the common citizen during this time.

      • But is that any different from the likes of most English or welsh people? Are the geordies or the scousers so different from us? Are we really so different? I’m not sure tbh. Like I say I’m leaning more to Yes but I’m also aware of what we’re breaking up here too it’s not a decision I’m going to take lightly. Yes we are different countries and proudly so but i don’t see the massive difference in our perceptions of society from your average English or Welshman tbh. I appreciate you taking time to answer though.

        • Hi David,
          The referendum is not about ‘breaking up’ people. It’s about a broken economic and political model which doesn’t suit the needs of people in Scotland or, as you rightly point out, a large amount of people in England, Wales or Northern Ireland too.

          We live in the most centralised country in Europe. Vince Cable described London as ‘draining the life out of the rest of the country’ (not just Scotland) which echoes Jim and Margret Cuthbert’s analysis of ‘bleeding Scotland dry’. Note that when they say London, they are actually talking about the priviliged few, not the vast majority of Londoners.

          The problem is that there is no realistic prospect of change. If a federal UK (along German lines) were on offer with a concerted effort to re-distribute and re-balance the economy for the benefit of the majority, then I might think again but given that House of Lords reform has been discussed for years and is going nowhere, I don’t see any realistic prospect of a shift coming any time soon. Too many vested interests.

          Independence is the only opportunity we have (we’ve been given a lifeline not available to those elsewhere) to change the economic and political model. I sincerely hope that after independence, we might see a shake-up in the rest of the UK.

          Then we add in the democratic deficit where unless you live in a swing seat your vote doesn’t count for anything, more pandas than Tory MPs and the rise of UKIP (thankfully) not seen in Scotland and , for me, it becomes a no-brainer.

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