Economics of Independence Scotland's Economy

Scotland’s almost £100bn of exports provide the foundation for a wealthy independent country

Today the Scottish Government published a new report detailing Scotland’s export statistics in 2015.

The new figures demonstrate that Scotland, with its well-endowed resources and manufacturing, is exporting to the value of £78.6bn (excluding oil and gas) to countries all over the world. Once you add the latest oil and gas figures – Scotland’s exports of oil and gas were worth £19.4bn (SNAP Commodity Balances and Trade) – this grows to almost £100bn. The oil price drop will lower that figure in the next set of Oil and Gas stats, but will rise again the following year as the oil price has recovered slightly and oil production has increased.

However, Scotland’s export growth to the EU and rest of the world has been damaged for more than 30 years by Westminster’s failed economic policies. The UK government followed a strategy of maintaining an artificially high pound to benefit the financial services sector and the City of London. Although this had the desired effect of significantly growing the financial services and banking sectors in particular, it also meant that countries with a weaker currency could not afford Scottish exports. This decimated Scotland’s industrial heartlands with engineering, shipbuilding, steel and coal jobs becoming uncompetitive versus imports. Germany followed the opposite path and became the manufacturing exporting powerhouse of Europe.

With the rUK sharing our inflated currency, this led to Scotland sending 63% of its exports to the rest of the UK. This is not a benefit of the Union to Scotland. This cost Scottish people their jobs, their homes and forced many to become economic migrants and leave Scotland to find work. Any credibility this strategy ever had was destroyed by the banking collapse.

An independent Scotland, with its own currency, would have enjoyed the opportunity to increase exports to countries outside the United Kingdom, allowing Scotland to achieve its full exporting potential. The recent fall in the value of the pound should also help boost Scotland’s food and drink exports and the value of the oil and gas exports when converted from US$ to GBP.

Scotland’s exports to the UK are essentially maximised and this was referred to by Keith Brown MSP, Cabinet Secretary for the Economy, Jobs and Fair Work, who said today: “The EU market is eight times the size of the UK market”, highlighting the immense potential for Scotland’s exports, but at the same time, the importance of staying in the single market.

Breakdown of exports

Exports (excluding oil and gas) were focused on the food, drink and tobacco sector (at £8.9bn), the financial services (£8.6bn) and the wholesale sector (£8.35bn). Without calculating exports to rUK, whisky exports to the international market was worth £3.8 billion.

Between 2002-2015 the food and drink sector increased by 73%. The 2017 target to exceed an industry turnover of £12.5bn was achieved in the 2011 yearly figures.

The food and drink sector is growing so quickly that it is expected to almost double its number of employees by 2024 to meet the sector’s growing demands.  In particular the whisky industry, which opened 9 new distilleries between 2014-2016 and have a further 40 planned for the future. Without the success of Scotch whisky exports, the UK’s trade deficit would have been 12% higher in 2015.

As well as its resources, Scotland also has its connections. Scotland’s top international export destinations in 2015 were the USA (at £4.56bn), the Netherlands (at £2.3bn), France (at £1.8bn), Germany (at £1.75bn) and Norway (at £1.3bn).

Denmark, Ireland, Spain, Switzerland and Brazil all import more than £740 million of Scottish exports each.

Scottish independence will benefit exporters

An independent Scotland – with control over taxation, finance, business regulation and global promotion – would be well placed to fully support Scottish companies in the global market. Scotland has the potential to expand exports. We just need the full autonomy to do so.

The Brexit negotiations in the coming months will determine the way the UK will trade with the EU and the rest of the world, and there are multiple scenarios to be analysed; should tariff-free trade with the EU/EFTA and open borders agreements be agreed as part of the deal, then an independent Scotland with single market access would enjoy massive economic and exporting growth.

Brexit guarantees economic uncertainty whereas, under these conditions, independence offers the ‘best of both worlds’ and the certainty of maintaining trade with the rUK and EU post Brexit. 

This article was republished Jan 2017.

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.


  • I’d like to see more being made of the issue of control of, access to and revenues to be obtained from energy resources. In the past, rUK wouldn’t allow us to become independent because of our oil and gas resources. Now the game has shifted and with Scotland generating over one quarter of the UK’s renewables with just 8.5% of population, with so much untapped and available resource (potential to supply one third of Europe’s energy from tidal alone), it is clear that their argument is solely about control of these resources, the availability of energy supply and the revenues to be gained (same as in the 1970s with oil and gas). The Yes2 campaign has to really focus down much more on the renewables sector and expose the UK governments determination to retain control in this area. Most disputes around the world are directly or indirectly linked to control of and access to energy resources and we need to make this clearer to the people of Scotland.

  • Not convinced that the currency argument put forward is as simple as you suggest. A weak currency hasn’t helped Japan.

    “Since the late 1990s, a 10 percent inflation-adjusted depreciation in currencies of 23 advanced economies boosted net exports by just 0.6 percent of gross domestic product, according to Goldman Sachs. That compares with 1.3 percent of GDP in the two decades prior.”

  • In the value of our exports to the EU, is there included that total those goods which are primarily exported to England, and then send on to the EU? Further, has that amount been subtracted from the total of our Exports to rUK?

    • There is a lot of argument over this – as Scotland is not an independent nation there are no fully accurate exporting figures so the latest ones are estimated after survey of under 2,000 exporting businesses. How accurate this is is highly debatable and it is the case that product sold rUK wholesalers etc who then export to the EU would reduce the rUK export figures but its hard to tell by how much. I am not going to put a figure on it but it wouldn’t change the fact that the UK imports more from Scotland than the EU does but three things are clear 1) The rUK exports more to Scotland than we do to them and we are England’s most important market – the french don’t buy English cheddar, bread and milk etc 2) Scotland is the only region of the UK with a trade surplus – very important to independent nation. 3) We don’t have to chose between trade with the UK and the EU as an independent nation trade would change but be dependent on the Brexit deal. so we have to wait and see how it would be effected.

  • Do you have any links to how the oil and gas exports are calculated? I have read about some oil/ gas exports not been given regional tax codes as leaving from the sea. Gers figures not showing unrefined petroleum. Refining of Scotland’s oil in England. 80% of a barrel of oil is turned into fuel Scotland produces far mare than it needs. I have also read that the subsea industry is worth £20 billion world wide per annum 40% of that figure comes via the uk ( Scotland are the masters in this field) with many of these companies in tax havens how can we achieve accurate figures? Many thanks – Grant Stewart

  • This is the stuff that needs to be summarised, simplified and updated. Then plastered over hoardings all over Scotland. Might I also suggest you stop talking to the BBC and their ilk. If they aren’t going to give you a fair hearing then what’s the point in engaging with them. They will soon develop a major credibility problem when it becomes apparent none of the Independence supporters they wish to besmirch, misunderstand, misinterpret or downright lie about, will actually talk to them. Get Scotland’s message out there in the streets every way you can, especially to those who weren’t persuaded last time. Because one thing is for sure, trying to get the message out via MSM is like squeezing a clootie-dumpling through a muslin cloth. Only the dripping wet tasteless stuff gets through, and it goes straight down the drain.

  • It has always surprised me that East Anglia sends its barley to Dewars in Perth. 40 year ago I suggested that the Ely beet sugar factory be converted to a distillery to make whisky.

    As for oil, it is not in my view good statistical practice to count its gross revenues as local GDP when most of the revenue never goes near a national bank let alone a local bank. Ireland attracted Microsoft to Ireland with a low corporation tax, but surely most of the proceeds of selling ‘Windows’ in Europe goes straight to Seattle, or some tax haven. Only the actual local expenditure should be included in local GDP. I think Meade and Jones who devised the UK system of national stats in 1940 would have agreed with me but their system has been replaced, I believe, by some garbled EU system which I have failed, I admit, to understand. I knew Meade well and for an economist he was remarkably clear-minded, but then like me he was a classical scholar before he descended into the muddy mire of academic economics.

    • RE: Only the actual local expenditure should be included in local GDP. – Given the interconnected and interdependent nature of economies and the international ownership of shares its seems that new theories on how to measure the economic performance of a nation or region may well be required. However rather than local income calculations or GVA etc maybe economics has to take into account not just the numerical performance of a national market but the well being of those that live and act within it. Happiness, health, wellbeing, confidence, sustainability … are all measures that should have equal footing.

      I do not look back to systems that predate Bretton Woods but look forward to an emerging new enlightenment in economic, political, social and environmental thinking of which Scotland’s independence is just the beginning – its not inward looking but outward looking and forward thinking that has led us to the brink of a hugely positive change.


  • Just a question: One of the arguments in a pamphlet by the HM Government is that ‘Scotland trades more with the rest of the UK than with the rest of the world combined’, therefore Scotland would be better off staying in the United Kingdom. Is that a valid argument? Would the figure in your research not support that argument in favour of the HM Government, seeing Scotland’s trade stands as £58.3bn (UK) and £39.8bn (International)?

    • Hi Michael.

      The high export figures demonstrate that Scotland has a strong economy.

      Naturally neighbouring countries do a lot of trade with each other – like Canada/USA, Portugal/Spain or New Zealand/Australia.

      There’s no reason why Scotland and rUK wouldn’t continue to have a strong trading relationship just like all those countries. Plus Scotland will remain within the Common Market of trade across European countries, so those relationships continue.

      Independence also gives Scotland control over investment and promotion to improve exports – such as by tripling the international work of Scotland Development International.

      This is one of the examples outlined in this video:

  • Before we get carried away about the export potential of Scotland, please look at chapter 4 of the recent Oxford Economics report. It argues that 70% of non-oil exports are vulnerable to border effects if Scotland becomes independent. The figures on this web page explain why – Scotland’s largest trading partner by far is England, Wales and Northern Ireland, ie £58bn, equal to one third of Scotland’s GDP, with the next largest trading partner the US at £3.6bn. How will our customers south of the border react to independence? An example is a key area of exports, financial services, ie £11bn of the total, or some 10%. A recent poll suggested that the majority of customers in England, Wales and Northern Ireland with accounts or savings plans with Scottish companies would move them after independence. All in all, some major hurdles for Scottish exporters.

    • Englands exports to Scotland are 62% so they wont want that to stop either but they don’t tell you that do they

    • If these customers are as petty as you suggest Andy then surely we would stop using English based banks,insurance companies, Nissan cars etc. I think their loss would be greater,It would be tit for tat. It’s all media hype.

      • When India became independent did we stop eating curry and drinking tea? When New Zealand did did we stop eating NZ Lamb? Do you still refuse to drink Australian red wine because they left?

  • Please someone come and talk at my daughters school 16 yr old needs to be engaged who is targeted young minds within the yes vote.

    • Get the school to arrange a debate and we will be there – we average 66% Yes after a debate.

  • This is a tragic misrepresentation. If all this is true all of us of Scottish descent will be clammering to move back north of the border to the the Tartan utopia. Alas I don’t think that will happen as the figures don’t, and I don’t believe can, show the benefit of being part of the UK. In the same way as it would be a tragedy if Britain left the EU. Trade federations will always favour the dominant economy. Within the UK Scotland is quite rightly over represented and has a big say in the running of government even in Tory times. Furthermore, I wouldn’t expect any favours from the UK government after independence especially the majority English part of it. They won’t bend over backwards to accommodate anything that is not in their interests.

    • TJ, you accidentally hit the nail on the head – “They won’t bend over backwards to accommodate anything that is not in their interests”. With globalisation, if there is money to be made there will be business done. Policy-makers on both sides will also do what needs to be done to allow that business to happen. Nobody will cut off their noses to spite their faces.

  • It`s becoming very clear that Scotland being shackled to the rest of the UK is holding us back. I think the west of Scotland could benefit the most from independence.
    We should re open our ports on the Clyde, invest in Ship building, kick Trident out and start drilling for oil in the firth of Clyde providing a huge boost to the area which has suffered immensely under Labour and Westminster rule. Renewable industries could provide many jobs up and down the country.

  • It is great to see the strength and diversity of the Scottish economy being highlighted here. I looked into the statistics last year (based on the 2011 numbers – and it was interesting to note that Canada has a higher percentage of exports to its larger neighbour than Scotland does to the rest of the UK (73.7% vs 65,6% respectively). Of course, the Canadians don’t send all of their taxes to the US Federal government and even have a different currency – they simply established a North American Free Trade Agreement (NAFTA).

    The claim is repeatedly made by the anti-independence campaign that having such a large trade partner is somehow a barrier to independence (most notably Ruth Davidson who obsesses over it). However, there are many countries who successfully operate in this way and haven’t compromised their entire sovereignty in the process, indeed they thrive with the powers that they have with independence.

  • Could I ask a question, please? Is the whisky figure of £4.6 billon the total exported from Scotland or the total exported from the U.K.?…..regards,

      • Pauline, if that is the case, that means that the Scotch whisky contribution is far greater than the 4.6 figure. A lot of Scotch is exported from English ports, therefore we are in an even healthier position than Michael has demonstrated.

        • Yes, I believe this is correct too. I read recently that tax is (or can be?) calculated from the port it leaves from…so with that in mind if an English-based import/export company bought a truckload of whisky and exported it say, from Dover to Germany, then the tax revenue would be credited as coming from the English-based import/export company, not the distillery that sold it. (That was how I understood what I read, but if there’s anyone with better knowledge or who can confirm this it would be good to know for definite)

          • “How are Scotch Whisky exports treated?

            All international exports relevant to Scotch Whisky are counted as Scottish exports, irrespective of the port at which they depart the UK. The data is sourced from the HMRC Overseas Trade Statistics report.

            Scotch Whisky exports to the rest of the UK are estimated based on GCS responses, as HMRC do not collect information on trade within the UK[1].”

          • The data used in the latest figures is sourced via the Global Connections Survey and estimates reported by Scottish Whisky industry and checked against other export data.

          • Whisky leaves say Folkstone. There is no tax imposed on it at the port but tax is collected at the country of destination. The only tax collected in England is the tax on the whisky sold in England. I read this information when it was published by a Customs and Excise person at Folkstone.

  • Yet another outstanding report from Biz Scot, our country is going to be buzzing on the 19th Sept. Keep up the good work.

  • Just makes you think what Scotland could achieve with full control over our future. Our greatest resource – the people of Scotland – will ensure we rise to yet greater heights given the economic freedom a Yes vote will surely bring. Nothing will hold us back!

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