Scottish independence: The complication of separation | The Economist
- 5 years ago
As Scottish thoughts turn towards a referendum on leaving the United Kingdom, we look at some of the issues requiring resolution before the people vote. Quarrels over oil revenues, defence and currency will not be settled quickly.
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For over 300 years Scotland and England have been joined in political union as part of a United Kingdom. Ever since, a campaign for independence has aroused support among Scots. Now that Union is under threat.
In 2014, 700 years after Robert the Bruce's victory over the English at the Battle of Bannockburn, Scots may be asked in a referendum whether they want to quit the United Kingdom for good.
Scotland already regained a number of powers from Westminster when the country was granted devolution in 1998 and the Parliament at Holyrood was restored the following year. But the Scottish National Party, or SNP, doesn't think this goes far enough.
In May 2011, confounding expectations, the party gained the majority of seats in Parliament for the first time. In January 2012 Alex Salmond, the SNP leader and Scotland's first minister, announced plans for the referendum.
Much is at stake. If Scotland were to opt for independence, the departure would be extremely disruptive - particularly at a time of economic insecurity.
The division of oil revenues, military resources, as well as the question of what currency would be used, are just some of the issues that would need to be resolved.
The SNP argue that Scotland would be financially better off going it alone, but would it?
Scottish lawmakers already enjoy far greater control over many areas of public spending. Over time this has led to an increase in disparity in the provision of services on each side of the border. Some of these differences have attracted controversy. Scots study at Scottish universities for free. South-of-the-border, students now expect to pay tuition fees of up to £9,000 a year.
The contrast is particularly stark when it comes to health policy. Scots enjoy free prescriptions on the NHS; their English neighbours pay £7.40 for theirs. Scotland, Wales, and Northern Ireland are allocated proportionally generous sums of money for public services by the Treasury in London. In 2009 to 2010, for example, if we were to notionally set the UK's average spending per person at 100%, Scotland's share was 113% with England lagging behind at 97% this translates as £9,940 being allocated to the average Scot with only £8,531 being allocated to his English cousin. On this basis, with a population of 5.2 million, Scotland would have faced an immediate and hefty shortfall of nearly six billion pounds were it to leave the Union.
But the SNP say they have the answer. They've long argued that an independent settlement should grant Scotland at least a 90% share of revenues from the lucrative North Sea oil fields. Their supporters hope this potential oil fund could provide the bedrock for an independent Scottish economy and continue to subsidize public spending on things like university tuition and health care.
But North Sea oil revenues have proved highly volatile. In 2008 to 2009, oil revenues from the North Sea contributed £12.9 billion to the United Kingdom's coffers. The largest sum in decades. But even if most of this had been Scotland's to keep the country would still have posted a four billion pound budget deficit.
Fast-forward 12 months however and the picture looks even worse. A crash in the price of oil meant North Sea revenues were down by roughly half - leaving Scotland with a 14 billion pound shortfall and reserves are dwindling.
The Office for Budget Responsibility expects the number of barrels produced to decline from two million a day in 2012, to just half a million in 2040.
But should a majority of Scots vote YES for independence, quarrels over oil would be one of many points of contention. Defense would prove a particularly thorny issue. Would Scotland share the cost of Britain's armed forces, create an army of its own, or rely on the protection of England and Wales? Currency would be no less of a headache. Alex Salmond wants an independent Scotland to join the European Union but the EU expects new member states to sign up to the single currency - an option that becomes less and less attractive with every passing month.
Despite a healthy majority in the Scottish Parliament, and record results in opinion polls, support for the SNP hasn't always translated into equal enthusiasm for independence.
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For over 300 years Scotland and England have been joined in political union as part of a United Kingdom. Ever since, a campaign for independence has aroused support among Scots. Now that Union is under threat.
In 2014, 700 years after Robert the Bruce's victory over the English at the Battle of Bannockburn, Scots may be asked in a referendum whether they want to quit the United Kingdom for good.
Scotland already regained a number of powers from Westminster when the country was granted devolution in 1998 and the Parliament at Holyrood was restored the following year. But the Scottish National Party, or SNP, doesn't think this goes far enough.
In May 2011, confounding expectations, the party gained the majority of seats in Parliament for the first time. In January 2012 Alex Salmond, the SNP leader and Scotland's first minister, announced plans for the referendum.
Much is at stake. If Scotland were to opt for independence, the departure would be extremely disruptive - particularly at a time of economic insecurity.
The division of oil revenues, military resources, as well as the question of what currency would be used, are just some of the issues that would need to be resolved.
The SNP argue that Scotland would be financially better off going it alone, but would it?
Scottish lawmakers already enjoy far greater control over many areas of public spending. Over time this has led to an increase in disparity in the provision of services on each side of the border. Some of these differences have attracted controversy. Scots study at Scottish universities for free. South-of-the-border, students now expect to pay tuition fees of up to £9,000 a year.
The contrast is particularly stark when it comes to health policy. Scots enjoy free prescriptions on the NHS; their English neighbours pay £7.40 for theirs. Scotland, Wales, and Northern Ireland are allocated proportionally generous sums of money for public services by the Treasury in London. In 2009 to 2010, for example, if we were to notionally set the UK's average spending per person at 100%, Scotland's share was 113% with England lagging behind at 97% this translates as £9,940 being allocated to the average Scot with only £8,531 being allocated to his English cousin. On this basis, with a population of 5.2 million, Scotland would have faced an immediate and hefty shortfall of nearly six billion pounds were it to leave the Union.
But the SNP say they have the answer. They've long argued that an independent settlement should grant Scotland at least a 90% share of revenues from the lucrative North Sea oil fields. Their supporters hope this potential oil fund could provide the bedrock for an independent Scottish economy and continue to subsidize public spending on things like university tuition and health care.
But North Sea oil revenues have proved highly volatile. In 2008 to 2009, oil revenues from the North Sea contributed £12.9 billion to the United Kingdom's coffers. The largest sum in decades. But even if most of this had been Scotland's to keep the country would still have posted a four billion pound budget deficit.
Fast-forward 12 months however and the picture looks even worse. A crash in the price of oil meant North Sea revenues were down by roughly half - leaving Scotland with a 14 billion pound shortfall and reserves are dwindling.
The Office for Budget Responsibility expects the number of barrels produced to decline from two million a day in 2012, to just half a million in 2040.
But should a majority of Scots vote YES for independence, quarrels over oil would be one of many points of contention. Defense would prove a particularly thorny issue. Would Scotland share the cost of Britain's armed forces, create an army of its own, or rely on the protection of England and Wales? Currency would be no less of a headache. Alex Salmond wants an independent Scotland to join the European Union but the EU expects new member states to sign up to the single currency - an option that becomes less and less attractive with every passing month.
Despite a healthy majority in the Scottish Parliament, and record results in opinion polls, support for the SNP hasn't always translated into equal enthusiasm for independence.
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