Business for Scotland didn’t comment when the Sustainable Growth Commission report was published. It was too conservative for us on spending, undersold Scotland’s economic potential – both for growth and in wellbeing terms – and the conditions for the introduction of a Scottish pound were overly restrictive.
We have no such reservations about today’s economic strategy announcement which demonstrates that the Scottish Government (SNP and Scottish Green Party) understand that everything has changed since 2014. The economic chaos of Brexit and Westminster’s incompetence has helped the Scottish people and Scottish business accept that we need to press reset and focus on Scotland’s economic, environmental and societal wellbeing, rather than the discredited growth at any cost approach of the Westminster parties. Today’s report, although in itself not revolutionary, confirms the Scottish Government’s direction of travel and opens up a clear path to a better nation with a stronger and more internationally focused economy than the Brexit-led UK.
Unionist politicians lied to Scotland. Brexit has been an unmitigated disaster which laid the foundations for the cost-of-living crisis and Westminster is currently mired in political, financial and economic instability. With Labour and the Conservatives committed to Brexit, Scotland becoming an independent nation, rejoining the EU and thriving through a Wellbeing economic approach is now the opportunity of our lifetimes. The Believe in Scotland poll published in the Sunday National proves that the people of Scotland are beginning to agree, with 61% stating they would vote Yes if the Wellbeing economic approach was put at the heart of The Scottish Government’s economic plans for independence. This morning the Scottish Government has done just that.
The Key points of the new Scottish Government Strategy are all ones for which Business for Scotland has been lobbying hard over the last few years.
- The Key message of the report is that Scotland can break with the low productivity, high inequality Brexit-based UK economy and use the full powers of independence to build an inclusive, fair, Wellbeing economy that works for everyone.
- You can read our Wellbeing Economy Manifesto here
- It sets out how we can build a new, sustainable economy based on our massive renewable energy resources.
- Our message has been that an independent Scotland can be a renewables powerhouse and that would allow us to slash energy bills. Scotland has the natural resources it needs to lead the world in producing renewable energy. We could do even better but staying within the UK is holding us back.
- The Scottish Government is clear that an independent Scotland will rejoin the EU and that Scotland’s economy and our people will benefit greatly from independence with EU membership.
- BfS has long held that there is not and should not be any ambiguity about Scotland rejoining the EU. All the Westminster political parties are committed to trying to make Brexit work but Brexit cannot work and it has been an unmitigated disaster for Scotland. Our businesses will be back inside the world’s biggest single market with freedom of movement for exports and people restored and we will regain full access to highly skilled and essential workers from Europe and around the world.
- The Scottish Government in an independent Scotland propose to invest the remaining oil revenues and use its borrowing powers, not to cut tax for the richest, but to set up an independent investment fund. They claim that the Building a New Scotland Fund will deliver up to £20 billion of investment in the first decade of independence, providing an important economic stimulus for our newly independent country. Earlier this year we pointed out that an independent Scotland would be wealthy enough to fund a just transition to renewables – and lower electricity bills for people and businesses.
- This has been a key call from Business for Scotland and in particular, we want to see massive investment in transitioning from oil and gas to renewables. We also believe however that a fund that would revolutionise close to market research and development would grow our economy exponentially across the board. As far back as seven years ago, we started calling for a doubling of R&D spending. According a NESTA report back then, doubling R&D spending to 3.4% of GDP over a five-year period would mean that Scotland’s economy would grow by around £12bn a year. We maintain, as we said before, that Scotland’s economy isn’t dependent on oil, it’s dependent on innovation and we aren’t doing enough. This fund is crucial to Scotland’s future prosperity.
The currency question – There will be a Scottish Pound. The Scottish Government now emphasise that their intention is to move to a Scottish pound as soon as is practical and we welcome that versus the more restrictive conditions of the SGC.
- Since 2018 Business for Scotland’s line on the currency of an independent Scotland has been out of sync with the Scottish Government. In 2017, before the publication of the SGC, we stated that: “We believe that an independent Scotland should have a sovereign currency at the time most in line with the economic and social wellbeing of the nation. That might be right away. It depends on the political realities of the day, but it’s probably after a transitional period where Scotland uses sterling until it suits Scotland not to do so”. Thus, maintaining maximum flexibility on the timing of its launch.
- A key thing to understand here is that independence will probably mean that Sterling will fall in value. Scottish exports, our seafood whisky and oil etc., will all be cheaper to purchase, causing our exports to grow significantly. England will also find that electricity, oil and gas as well as many other products it buys from Scotland will be cheaper than those from nations not using sterling. Therefore, keeping Sterling for a transition period will boost exports and create jobs, control inflation across the UK and increase trade with the rest of the UK after independence, not decrease it as suggested by UK government scaremongering. So, keeping Sterling initially and then launching a Scottish Pound when it suits Scotland is the optimum strategy and we welcome the fact that it has now become official Government policy.
We also welcome the First Minister’s message in her talk that, Now is the Time – The UK economy is holed below the waterline and whilst all the main Westminster political parties remain committed to Brexit, no UK Government of any party/colour can alter the downward path we are on as part of the UK.
The Fiscal Commission being boosted to effectively mirror the functionality of the OBR, offering forecasting and modelling to ensure rigour in the Scottish Government’s economic thinking is also a welcome commitment.
Where we do differ from The First Minister quite significantly is when she said that in her opinion “Scotland bears a moral, if not legal responsibility for a population share of the UK debt”. Scotland has been subsidising the UK for generations as we have proven in our report ‘The accounting trick that hides Scotland’s wealth’ which is updated every year has been shared on Facebook more than 81,000 times. Yes, the negotiation will include discussion on the UK debt but it is not incumbent upon Scotland to take a share of that debt because we have already overpaid.
Indeed the UK Government has made that point crystal clear when it stated:
“The Treasury has today set out detail on government debt in the event of Scottish independence. The technical note makes clear that the continuing UK Government would in all circumstances honour the contractual terms of the debt issued by the UK Government.”
In their opinion they claim that ‘An independent Scottish state would become responsible for a fair and proportionate share of the UK’s current liabilities’. However, they also accept that “An entirely separate contract between the continuing UK Government and an independent Scottish state’s Government would need to be established. The respective shares of debt and the terms of repayment would be subject to negotiation.”
Business for Scotland believes that the UK Government’s stance in the negotiations will be that Scotland should take on a population percentage share of the UK’s debt. We believe that it is an equally valid stance for the Scottish Government to say that we have overpaid for the UK’s debt which Scotland did not need nor benefit from and that we are owed compensation. Those would be opening negotiation stances and discussion would hopefully lead to a win-win agreement. Please also note that all fixed assets such as oil and gas within the boundaries of Scotland belong to Scotland without negotiation but that proportional ownership of all non fixed assets (naval ships etc) are up for negotiation and therefor any debt Scotland accepted would be matched by corresponding UK assets, Scotland would receive to the same value and so there would be no debt burden.
This policy is as sound an approach as I have seen on how to transition from Scotland in union with the UK to one that is independent. I am however more dismayed by the negative focus on currency. By not committing to a fixed currency plan the Scottish Government is leaving its options open and not engaging in crystal ball gazing. A telling statement for me and the only stipulation relating to currency was that the new Central Bank would be up and running on Independence Day. This is not the Herculean task that people seem to think it is and I don’t see anything stopping a digital launch of the new Scottish pound long before Independence Day.
There is too much fixation about the significance of Independence Day as if it marks the start of a new Scotland. As I see it and as this policy seems to indicate, a new Scotland will begin to emerge the day after a successful Yes vote, and will continue to do so from there on in.
Independence Day will be the cosmetic icing on a cake long ready for the eating.
The policy is insipid and vague and uninspiring . The currency question is completely nuts.
I’ll buy a coffee for anyone that can answer me this …
Say we were a newly independent Scotland in 2023 and now in a period of sterlingization until the unknown tests are met .
1) How could we have afforded covid bailouts without QE as a currency issuer? Ditto with energy guarantees /cap.
2) why should we be tied to the economic fallout of decisions made by the RUK chancellor and UK govt policy … ie rising inflation and interest rates due to UK govt policy and budget decisions.?
Just imagine being tied to pound as Truss and Kwarteng trashed their economy and currency and there would be NOTHING an Indy Scotland could do about it .
David the disastrous scenarios you have just described apply to Scotland in the Union not to Scotland as an independent country!
The Scottish Government’s policy sets out the direction and value proposition it intends to follow, and as they explained future papers will put meat on the bones of issues such as trade and pensions etc. I think a Wellbeing economic approach is hugely inspiring. I don’t drink coffee but here goes:
1) The policy is to use Sterling for as long as it suits us – in a situation where it does not sure us we can (having already put plans and central bank etc in place) move to our own currency and in a situation such as more covid style bailouts being required we could use QE in the same way as other countries were doing, even with a new and relatively unproven currency as that would be a global trend. The SNP policy allows for the Scottish pound to be launched within months of independence if that is practical and the situation you suggest would make it practical.
2) If we have a referendum next year let’s assume a 2-3 year transition period we are as 4 years away from independence day – If the then UK Gov were to be so stupid again we would simply launch our own currency. This isn’t in the paper but I believe that the Scottish Pound could first be launched as a digital-only currency and run alongside sterling – ready for a rapid transition.
Also please note that the Scottish Government using sterling would still be able to issue guilts and raise borrowing at low cost – in other currencies – this being the case when it launches the Scottish pound and it were to be valued at say 5% higher than the currency borrowed in then it could pay back short term debt at a discount.
Until the 50 % NO / don’t know Scots are informed of just how rich Scotland is in finance, culture and history the 50% +- will never increase. Neither the NU-S.N.P. nor the National media have ever published those facts. I wonder why?
A very constructive presentation from the First Minister today,
I feel that finally we have taken a large step in the direction of Independence,
While there are several good things in the SG’s paper I have a number of reservations.
There is too much vagueness on currency. A short period of using sterling to gain the flexibility you refer to is OK but both Swinney and Blackford in the last two weeks have indicated that they have not moved from the position of maybe 10 years of sterlingisation and meeting Andrew Wilson’s stupid six tests. Our economy could be completely ruined by being under Bank of England control for that length of time. Besides, there is a rush to try to get back into the EU and as you know a country needs to have its own currency in order to to join.
I agree with you and not with the SG on debt. If we are to make any concessions on debt we need to be tough in the negotiations and I have little confidence in the SG in this respect after the way they sold out on wind energy earlier this year. The UKG must not be allowed to assume it owns all the asets.
Thirdly, you and I have agreed in the past that well-being and neoliberalism are incompatible but the SG continues to heed neoliberal advice. The FM does not seeem to understand that a currency issuing country is usually better to run a deficit than to balance its books. A government deficit means there is more in the economy for businesses and individuals. The latter, as currency users, do have to try to balance the books but that is not true if you have your own currency. There are still constraints, however, such as not going beyond your resources and thus causing inflation.
I agree with you. I think it’s possible to have market forces that work with well being and justice. I don’t know much about economics but it seems like the currency question is key. So disappointing
I don’t see the currency message as disappointing at all – it is the optimum strategy – the UK is embroiled in economic chaos so maintaining maximum flexibility in currency policy and moving to a Scottish pound on the day it is beneficial for us to do so is the right policy.
You seem to be envisaging a process of ‘independentisation’ which will be like the Brexit process — ie, negotiation (to a deadline) with the UK government.
But there is no prospect of such a process. Whether a referendum comes about by (a) the UK government agreeing, (b) the Supreme Court agreeing that Holyrood has the power, or (c) a UK or Holyrood election is turned into a referendum, and the referendum result is then 50%+ for independence, — the UK government will not be obliged to take part (a) in any negotiation, (b) to negotiate in good faith, or (c) to accept any deadline for negotiations.
A positive referendum vote will have no effect on the constitutional positions of the
Holyrood Parliament or the Scottish Government, and ‘Scottish Government’ civil servants will still be members of the UK Civil Service, whose lines of management end in Whitehall. There is no possibility that these institutions, which are UK institutions, could or would simply slip their moorings in the middle of the night and become the next day the provisional government and parliament of an independent Scotland.
If the UK, as a whole, is opposed to Scottish independence — and it is — then Scotland will only become independent when the Scots take independence. It is mere dreaming to believe that the UK government will agree to independence as they might agree to greater devolution. And actually, this is not so much a dream as a nightmare — independence but only on the terms that Westminster agree to would not be worth having.
All looking very positive. Let’s push forward for independence !
The size of the debt is left open, and I understand why. Negotiations will need to be undertaken as to the division of assets and debt. The debt has a large QE component. Not real money as this debt is owed to our ourselves. Can be written off, set on long long terms. And minimal interest or even negative interest applied. Scotland is unlike to want to share that as Scotland has no control on what would happen. I already see attacks coming from Unionists on this subject. We will need some arguments to counter.
Fab news. We’ll done. Looking forward to an Independent Scotland
Sounds like a plan let’s go it