02 Sep 2016
September 2, 2016

Capital thinking

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This is a wee addendum to the adjacent ‘Oil and Reason’ piece (here at Article 5). It’s just to flag a single point which should impact more on the independence dialogue, but instead seems to be generally missed. We’ll send out a little more detail, including references, with our newsletter but for now it’s the broad principle we’d like to flag to you.

Scotland’s deficit is half those of Wales and Northern Ireland, and smaller than most English regions. Indeed, the only parts of England which are net contributors, where expenditure is subtracted from tax to leave a positive balance rather than a deficit, are London and the South East.

London and the South East obviously have several advantages, including a large population to drive the primarily service-based economy. But of course they also benefit from being at the centre of, or in the immediate environs of, a sovereign state’s capital. There is therefore at least an element of circular argument within the Scottish unionists’ reasoning because if Scotland were independent then our capital and central belt would have the benefits which accrue to those of any sovereign state; this would naturally have a positive effect on the ‘deficit’.

This is just one small illustration of how the presentation of GERS figures is miscast in the media and it’s important that the independence movement rebuts this trend as time passes. The ‘capital city’ phenomenon would not account for the whole of Scotland’s deficit, of course. But as our grannies used to say, “mony a mickle maks a muckle”. It’s a question of chipping away at the received but manifestly incorrect notion that an independent Scotland would have an unsustainable deficit.

There are many other reasons why the true deficit of an independent Scotland would be much smaller than the GERS figure. For example, deficits are higher across the world at present because of the 2008 crash, and are now declining. Scotland’s oil price is at an unusual low and will recover somewhat in the coming years. Greater inward investment would accrue to an independent Scotland. Norming Scottish Defence expenditure to other small and successful EU states would alone save at least £1B. Commonweal think tank and The National newspaper have also made some important points here about how an independent Scotland’s debt might be negotiated and calculated.

In the end, of course, it will be necessary for the Scottish government to say how it would, with independence, manage the deficit down. But this is no different from any other small and successful European state.

A key point in the coming months and possibly years before indyref2 will be to find the right language to convince ‘uncertains’ who voted ‘No’ through fear last time that this time independence is far less risky than Brexit.  Correcting the misleading GERS narrative over Scotland’s deficit will be an important part of that.