Does leaving the UK make economic sense?
Land of William Wallace and Robert the Bruce. Kingdom of the Picts. Country of rolling mists and the still waters of the lochs. The romantic notion of Scotland making a bid for freedom after centuries of repression by the English must certainly stir the (brave) hearts of many a Scot.
The question is, what would happen if Scotland really did leave the Union? Does the case for Scottish independence stack up, or is this a triumph of hope over harsh economic reality?
Certainly, it is a fact that Scotland gets a net subsidy from England. Scotland accounts for 8.4% of the UK population, but 9.2% of UK public spending.
Total non-oil tax revenues for Scotland are £42.7 billion, while total Scottish public expenditure amounted to £59.2 billion. That means that it is getting a subsidy of £16.5 billion.
"Yes, but what about North Sea oil?" say the nationalists. Well, it all depends how you slice the pie. If Scotland only got a share of oil revenues in line with its share of the British population, as the UK Treasury would say, then Scotland would still be getting a large subsidy.
But if, as the SNP argues, Scotland get the bulk of oil revenues, then the subsidy is reduced but not eliminated. Who is right? Well, I suspect the Treasury would win.
If Scotland was independent there would, of course, be no subsidy, and either taxes would have to go up or spending would have to be cut. Currently, Scottish students pay zero university tuition fees, while many English students pay £9,000 a year. I suspect if Scotland became independent, that subsidy would be one of the first things to go.
It is also interesting to ponder what would happen to Scotland's currency. Could Scotland keep the pound? If it did, it would face the situation of being a sovereign nation that would have little control over its currency, as I presume the Bank of England would still set interest rates. Such an arrangement could work, but it could also lead to increased tension between the two nations.
The alternative would be for the Scots to join the euro. But if you still think this is a good idea, just look at the events in the eurozone over the past year. Other small nations that have joined the single currency, notably Greece, Portugal and the country that's most similar to Scotland, namely Ireland, have really suffered.
They have endured bailouts, draconian austerity and this year they face severe recession. Ask most Irish people whether they are better off inside or outside the euro and I think I know what they would say. Does Scotland really want to be part of this euro mess? If I was offered the opportunity of joining the euro, I would run a mile.
Joining the euro also raises the question of debt. The UK's national debt is forecast to reach £1.4 trillion by 2014, when the SNP plans to hold its referendum on independence. That means that Scotland, with around 10% of the UK population, would have a debt of £140 billion.
What do you think the national debt of Ireland is currently? Yes, you guessed it: it is also £140 billion. Scotland would risk a debt crisis as big as Ireland's if it joined the euro. Is this really what Scots want?
Finally, cast your mind back to the financial crisis of 2008. The Royal Bank of Scotland (LSE: RBS) was on its knees, drowning in a sea of bad debt, and had to go cap in hand to the British government for a bailout.
Just a few days before another Scottish bank, HBOS, was also crippled and had to get an emergency cash injection. These two Scottish banks received almost £70 billion in emergency funding from the Treasury.
While an economy the size of the UK could cope with such calls on its cash reserves, an independent Scotland would not have stood a chance.
So, in summary, if Scotland left the UK it would face a future of higher taxes, including high student fees, lower spending and the real danger of being ravaged by a eurozone or a banking crisis.
The Scots are a proud people and they live in a beautiful country, but their yearning for independence is misplaced. If it comes to a referendum on independence for Scotland, whether it is held now or in 2014, in my opinion the Scots should vote decisively 'no'.
But what do you think? Please share your thoughts in the box below.
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