Independent Scotland faces 'difficult' cuts, warns thinktank
By - youwhatwhat
Or we face more "difficult cuts" staying with the status quo of Bluekip Brexit Britain. Hmmm... Hard choice there...
Well, in the UK we might lose £s but at least we'll be balls deep in lbs.
Yes political spectrum
<- Left for D people Centrist garbage Right Facists->
Unionists "Look how shit the UK is, doesn't that make you want to stay and leave your country in control of Westminster?"
>SNP MP Alison Thewliss said: “To imply that Scotland is virtually the only developed economy in the world for which there is no good or viable currency option is a ludicrous suggestion which no one can or should take seriously.
>“Scotland has a fundamentally strong economy but we need the full fiscal and borrowing powers which only independence can deliver to secure a fair and sustainable recovery.”
She ain't wrong you know.
That's not really the point. The report doesn't say adopting a new currency is impossible - it says there isn't a way to do it without causing issues in the financial system, denting confidence in the Scottish economy and the Scottish Government making compromises on services they currently provide.
Thewliss's response is pretty irrelevant - perhaps she'd be kind enough to respond to the actual issues raised instead of saying 'Scotland has an economy so that means everything will be OK' - that might give uncertain voters more confidence.
> it says there isn't a way to do it without causing issues in the financial system
First, there are already issues with Scotland's fiscal system being that it doesn't have control of them, Scotland is an Export economy but the UK as a whole doesn't produce enough food, and so the Bank of England *must* execute a fiscal policy designed for an import-based economy because the UK as a whole is a net importer.
Second, the report ***completely ignored*** everything written by advocates of an independent Scottish currency regarding how a transitional process from sterlingisation to the new Scottish currency might work, and also ignored that the current status quo basically is sterlingisation.
The report is either woefully misinformed or blatant intellectual dishonesty. It isn't worth the paper it's printed on.
I say this because I've read it.
>Scotland is an Export economy
Only if you cherry pick data. The figures put forward by indy groups (like [Business for Scotland](https://www.businessforscotland.com/independent-scotland-will-be-an-international-exporting-powerhouse/)) are false, and rely on people not understanding basic economics. The idea that Scotland exports more than it imports does not take into account its trade with the rest of the UK - which makes up nearly 60% of all Scottish trade. Take that into account, and Scotland imports more than it exports, as does every other UK region. You can see this - and the data - [here](https://theferret.scot/scotland-uk-country-export-import/), and [here](https://digitalpublications.parliament.scot/ResearchBriefings/Report/2020/9/14/Scotland-s-exports-2018).
>the UK as a whole doesn't produce enough food
Nor does Scotland.
>the report completely ignored everything written by advocates of an independent Scottish currency
That's because those advocating for that are either (i) not respected economists, or (ii) are economists, but are pushing an agenda (e.g. Richard Murray). Look at what economists from Oxford, Harvard, and others across the world say. People who do not have any skin in the game. They all say it will be hard and have costs.
>the current status quo basically is sterlingisation
No...the current status quo is Scotland is part of a country (the UK), and uses the currency of the country it is part of. The central bank of the country Scotland is part of, acts on behalf of that country. If you think that's Sterlingisation, your not half as informed as you think you are.
> The idea that Scotland exports more than it imports does not take into account its trade with the rest of the UK - which makes up nearly 60% of all Scottish trade.
That's actually the core point in contention. The desire is to make those exports official, and to do so now at a time when the UK is already experiencing a negative supply shock.
>Nor does Scotland.
Because everything I've read suggests Scotland is a net exporter of food and drink.
>That's because those advocating for that are either (i) not respected economists,
So, Stephanie Kelton, Warren Mosler, Pavlina Tchernova, Bill Mitchell, etc were the people who correctly predicted the Eurocrisis, meaning they're not just internationally respected but the pre-eminent experts on state finance globally at this stage.
It was Bill Mitchell, who is not Scottish, who laid out the process at an economics conference in Scotland several years ago.
So yes, they're economists who are internationally respected, and only one person in their particular universe, Mark Blyth, is Scottish, and he's a latecomer to their economic position anyway.
This was ignored by the Institute for Government because they're an arch-conservative propaganda house, and their work cannot be trusted unless submitted to a reputable journal for peer review.
There's the other side to that arguement that it would also cause a lot of pain to the rUK side of things.
That might have some relevance when it comes to negotiating the exit deal which, relevant to this discussion, will include negotiation on what debts and assets (including crucial currency reserves) Scotland will assume. rUK will hurt but I doubt it will be to the point of giving Scotland a generous deal - Scotland likely will get some debts and some assets in some proportionality to population/economy. Then the scenario as in the article will play out where *if* Scotland has some amount of debts already and a possible large fiscal deficit (I don't think anyone quite knows how much this will be) as a new country, borrowing will be expensive. That's just simple economics.
The richest country in the world when it comes to oils reserves, yeah, I think we'll be alright! And before anyone spouts off about oil not going to be used for fuel from 2035, well, its still used in EVERYTHING else!
Source for richest country in the world for oil reserves?
Well yes there once was a cash cow called Great Britain then UK then eventually England.
In what sense is Thewliss's quotation a response to the paper's thesis?
The authors point out that Scotland's options on Indy Day would be a) use sterling informally or b) have a free-floating currency. That's pretty much inarguable. Using sterling has the downside of us being unable to make our own monetary policy (in fact we would have less influence on the BoE than we do now). Again, pretty much inarguable. If we use a free-floating currency, we would need to have sufficient forex reserves to influence the exchange rate (Denmark, for example has $67bn, Norway has $78bn). That will require borrowing or saving, which will entail difficult fiscal choices to either put money towards increasing or reserves or giving creditors confidence to lend at better interest rates.
Nobody is saying there are no "good or viable currency options", they're saying that in the short-term there will be serious challenges. It's better to be up-front about this with the electorate than suggest things are going to get better from day 1.
>The IfG said: “These would not be insurmountable challenges for an independent Scotland, but there would be no avoiding difficult economic choices.”
Don’t think she really addressed the concerns the report raised.
Well she didn’t really say anything to be wrong about. Not even a suggestion of an alternative currency option. No plan for how to avoid £8.5bn in tax or spending cuts. No roadmap for how long we’d take to pay off the higher cost loans that a small, unproven country would have to take. No hint of how they’d do it different or better, just the vague notion that being Scottish is enough to be better.
SNP, once again, just making empty statements and emotional pleas. The permission to make “our” own mistakes shouldn’t be granted based solely on nationality.
Dependent Scotland faces 'difficult' cuts 'enforced by London.'
What was that austerity we had for ages, easy cuts? What about the tax rise that's coming? Things we never voted for but got imposed on us because we're part of the UK. I'd rather risk being poorer for the opportunity to do something about it than the current situation thanks. Other countries are able to find a way and do better for themselves, sure we can, trying to do something about it is better than sitting here and accepting it.
I’m being sincere, what could we do about it that we can’t now?
Pretty much anything we wanted if we could get enough people to vote for it. At the moment most people in Scotland don't get the governments they vote for. What does that do to people psychologically, being a people who predominantly vote for left wing parties but rarely getting left wing government.
Being in control of your shit is really important to people, we're not and yet we think of ourselves as a nation. People think this stuff doesn't matter but it really does and it does so much damage to people and the nation. Such a shame more people don't understand that.
I wouldn’t risk being poorer for the illusion of more state control by the voter, I’m fairly cynical with the political system in any state I doubt we would reach a point where we could genuinely improve our quality of life. If independence won’t improve our quality of life then it doesn’t offer much beyond vague idealism to me. That’s the SNP to me though I’m confident a better party will emerge if we continue this shitshow.
Well I guess you'll have to accept the status quo then. Still not sure how Scotland get's better off within the UK though. It'll just end up more like Wales or NI. More dependent on central funding with most of the wealth creation controlled from London or outside the UK. Financial services is a good example, Scotland's financial services are all run from outside Scotland now, mostly London.
Exactly, London generates about a third of the GDP for the UK. About a trillion. I don’t understand financial politics but from what I gather London is extremely well situated to handle financial services. If your going to operate outside that system it seems natural you’d suffer a loss of revenue. I’m at sea with the money trade though I could be wrong.
Yep, be interesting to see what impact London's loss of influence due to Brexit and New York overtaking it will have. But it highlights the fundamental issue, if you tie yourself to something you have little control over you can't complain when it does something you don't like. That's why long term I think Scotland is better off doing it's own thing. You look at Dublin now, it's a major European city, wouldn't have been that if Ireland had still been in the UK. I think if we want Scotland to have the best chance of prospering in the long term we have to take the risks in the short term. The problem you have re the politics is there is no alternative to the SNP so if the current situation remain the SNP will remain in power for the foreseeable, ironically you're best hope for something new is independence as once that's done the thing that holds the SNP together won't exist and it will probably fall apart.
Full article here: https://archive.is/rtFMt
There is one particularly difficult cut alright
Its a biggie though
I know it will take us a few years to sort everything out, but I’m willing to take that risk. Can’t be any worse than the current shitshow.
>Can’t be any worse than the current shitshow.
It can be significantly worse.
Under Cameron, the UK ringfenced substantially all services from cuts. Economic growth produced most of the reduction in the deficit.
Under independence, the probability of this occurring is zero. Because Scotland's spending is subsidised by the UK, if we were independent there would need to be either reductions in the size of spending (hitting all parts of the budget) or increases in taxes. The net effect of either course would be the same. And this would be into an economy that is experiencing headwinds from: trade disruption worth 60-70% of GDP, substantial financial disruption, aging population, and decline of oil and gas. Btw, the latter two effects, which are going to occur anyway, will cost about 5-10% of GDP over the next ten years...getting over this even if we aren't independent is going to be challenging. Then remove 60% of GDP of trade, then potentially add 10-20% depreciation of Scottish currency...I am not sure who couldn't be deeply concerned by this (for comparison, UK trade with the EU is 5-10% of GDP, the economic effects of Brexit ended up being close to nil...this should make clear that the SNP's position is totally ideological, they simply do not care about the economics...because no-one who understood the economics could support independence today).
Right now, Scotland benefits from being part of a trade union with a country that has domestic market that is 10x larger, we can sustain a higher level of govt spending than would be possible if we were independent, we have tariff-free access to markets across the world, and we are able to pursue an independent policy in many areas. Importantly, the policy areas over which we would gain control are areas which the SNP and the Scottish govt, to be frank, have no immediate capacity to manage either. Whatever your political persuasion, the Tories have produced first-rate economic management since Cameron (strong growth, managed to run a surplus without cutting key areas of the budget, unemployment at five-decade low, managed the impact from Brexit, managed the impact from corona)...the only circumstances in which leaving can be justified is if you expect better management. I will be blunt: the SNP do not care about the economics, they have no-one who understands the economics, and they are not planning to hire anyone who understands the economics in the near or distant future...they don't care.
I am an independence supporter, although not immediately because the SNP clearly don't have the resource to handle any transition (Again, they aren't even trying any more...Sturgeon tried briefly with the Growth Commission...they have dropped any pretence, and are back to full Salmond), but it is alarming to me that people have been convinced by your line of argument. It is totally wrong. Even the briefest examination of the economic fundamentals would suggest it is false. It is not a risk. You are sacrificing everything, to gain what...getting rid of Trident? Be very clear: the people who argue for this do not understand the economic cost of independence today, their perspective is very limited, they do not care or know about the economics. You are putting your economic future in the hands of someone who does not care what the economics are. They would leave the UK even if it meant we had to live in caves and eat grass.
Or we could just avoid all this mess and repeal the Scotland Act and bulldoze Holyrood. Scotland is the most devolved government in the world and it's still not enough for Sturgeon. She is fueled by ideology, not economical facts.
I love the irony of Scotland wanting to be part of the EU and under their jurisprudence, and complained that Scotland would be worse off out of the EU, yet want to double down on economic downturns by leaving the UK.
They're happy to be ruled, so long as it's not by Westminster.
Trade with England is currently 60% of Scotland’s trade. While there would be disruptions after independence, that trade would not magically disappear completely. You can’t make a credible argument based on zeroing this number.
That’s childish, things could be infinitely worse.
this is the part people forget. Its been austerity for 10 yrs with cut after cut after cut and now with brexit they are getting worse.
Yes there will be cuts but fuck me they will be OUR cuts
cue stream of it will be super mega ultra austerity in an indi scotland
But what cuts and what tax rises exactly?
Isn’t it fair to ask and then decide if you think independence is worth it?
He says as torys broke a promise by raising taxes
When were we asked about those rises
I’m more concerned about how 10Bn deficit would be plugged on independence though … the ‘our cuts’. Particularly since the NHS is already in a hole.
and all i know is if we do nothing we will be just as boned with the zero control we have now
I’m not sure … I mean things could get a lot worse… it’s not unreasonable to ask for some kind of step by step plan, even if it makes some assumptions…
yes they could get alot worse but your argument is simply boiling down to
It might be hard and we could fuck it up better not try
If i lived by that attitude id likely be dead already due to alcoholism or drugs while spending my days on the bru
No the argument is we know ‘we’ll be short more than a few Bob so what’s the plan?’ A plan would give me confidence they know what they are doing. Absence of a plan makes me more likely to think things would be much worse…
the current government has no plan either but you are asking me to stay the course and it will totes get better soon. even though 40+ yrs of experience has taught me otherwise.
I mean we have an anti scottish PM an equalities minister recently caught on an anti minority rant and a cabinet that is only representative of the uk if you shrink it down to the size of a university.
Im not married to indi for indis sake i simply see no other way to change direction within the uk framework
asking for a detailed plan at this stage is pointless theres way to many outside factors that cant be answerd mostly revolving around how much of a car crash the negotiations will be.
add into that the money spent our behalf wont truly represent our defecit. especialy as they are using the IMB to bypass holyrood which may or may not reflect a spending priority going forward.
>Yes there will be cuts but fuck me they will be OUR cuts
So cuts to public services are just subjectively bad then?
They are bad when the Tories do them, but all fine and dandy when someone in a kilt does them.
Lol, okay. Totally sane comment...
No all cuts are bad however as someone who expects an initial shitshow in ghs begining they are likely inevitable while we build from the ground up and shift around what's wanted or needed.
Contrast that with the corrupt shiy show that is the UK government who are yet again in the news for breaking their own rules and continually siphoning public funds to there mates while the deficit that austerity is supposed to fix continues to grow
Why would them being “OUR cuts” make it any better? It’s still cuts. It’s still austerity.
that was poorly worded.
by our cuts i means cuts made by governments we vote for rather than those that find money for nukes and vanity projects for dead royals but cant find the cash to fead the populous
I didn't vote for them. Do I avoid the cuts, then?
if you can become an independant country of 1 sure why not away you go with your Reductio ad absurdum
>why not away you go with your Reductio ad absurdum
Your argument was absurd to begin with.
"Cuts are ok as long as their "our" cuts"
like i said that was a poor wording
but just noticing who im replying to i note that this is nothing more than a waste of energy ta ta ali
It wasn't the wording that was poor. It was the sentiment.
Austerity is arguably responsible for slow recovery and lack of growth last decade. The financial deregulation caused the crash. Then we have brexit. That's theee UK policies that have damaged the UKs economy and potential growth . Who's to say how they will fuck us next.
>Can’t be any worse than the current shitshow.
My sister (no pot to piss in at the time) used this as a reason to vote for Brexit, just FYI.
they missed the ‘n’ again
The woman heading the think tank is arch-conservative by American standards. She published a book in 2008 called "In Defense of America" which was trying to see the Bush Administration through rose-tinted glasses.
IfG blatantly ignored a number of facts in its economic analysis. They didn't say anything factually untrue but they lied by ommission.
So just like Brexit then but with an eventual upside. I'm all for it.
Who’s think tank ?
The Institute for Government. They're credible.
Scaremongering campaign off to a start 🤣
Where do you hear it from?
Maybe, but then it won't be an imposition by what is, as far as I'm concerned, a foreign government.
Does anyone know where one can find the full report? I'd be interested to read it.
It sounds like a useful look at a possible outcome, but I'd be interested to see their assumptions and the details. For example, the conclusion that Scotland will have difficulty borrowing really depends upon what view the markets take of Scotland's economic prospects. I'd be interested to see how they estimated the market's likely reaction.
As much as an independent Scotland would be a new state with no financial history, it would still be a politically stable democracy and it would still possess all of the resources and potential it did before independence. It'd be helpful to read about how they weighed that all up.
So much better than Brexit but with loads of financial benefits too? Bring it on!