Scottish Independence? Och, awa an' bile ye sporran!

‘It is never difficult to distinguish between a Scotsman with a grievance and a ray of sunshine’.

 

Never mind the EU elections; the most entertaining political event of 2014 will be the referendum on Scottish independence. The predictions are a melt-down in the ‘yes’ vote.

 

The Scottish Nationalists will be obliterated. The opinion polls show a massive lead for ‘no’ with  ‘yes’ getting only 27% vote. A much safer guide is the bookies’ odds. Currently the odds are 10/1 against a ‘yes’, 11 to 2 for a ‘no’. One punter has £200,000 riding on a ‘no’ vote, and another has placed a ‘no’ bet of £50,000.

 

There is no merit to their case, which entirely rests on sentimentality; the Scotland of Burns Suppers, tartan, and fried Mars Bars.

 

The economic arguments for ‘no’ are overwhelming.

 

The only real asset is North Sea oil. Not only is this a wasting asset but the price is likely to drop sharply as the US increases production. It accounts for a massive 18% of GDP, making Scotland vulnerable to  instability and risk for  the whole economy.

 

The subsidy to Scotland is £25 billion. The revenues from oil would be at best £7.2 billion. Spending per head in Scotland is 28% higher than in England, a difference of about £1500. Most Scots would reject independence if it left them only £500 a year worse off. Such is the price of patriotism. Yet they will find it almost impossible to maintain their  spending on free university tuition, free elderly care, free universal child care and more generous pensions, none of which are available in England but largely paid-for by English taxpayers.

 

Then there’s the EU membership problem.

 

Salmond has repeatedly said, against all the legal advice, that Scotland would automatically continue as a member. It won’t. It will have to go through the whole lengthy rigmarole of the application  negotiations. So good bye to farm subsidies for all those Highland crofters for several years.

 

And then they will be refused, because membership requires a unanimous vote of all EU members, and the Spanish will vote it down for fear of setting a precedent for Catalonia.

 

There’s the currency issue.

 

If they stay with the GB£, their fiscal policy will be controlled by the Bank of England, which would create the kind of monetary union without fiscal union that has proved so disastrous in the Eurozone. If not they will have to set up their own central banking system. In the unlikely event of joining the Euro, a central bank would be pointless and unnecessary, but Scotland would be then controlled financially from Brussels. Threadneedle Street seems a much safer potion.

 

Creating a viable economy requires massive expansion of manufacturing, commerce, and financial  services. Since the collapse of RBS and HBOS, (and what would have happened there had Scotland been independent?), financial services have performed poorly. Scotland could also be landed with the banks’ £187 billion of toxic assets.

 

And Scotland would be in  direct competition in all economic categories with the City and England generally. No contest!

 

Scotland could go the way of Greece. Edinburgh was once dubbed the ‘Athens of the North’. History could repeat itself.

 

Happy Hogmanay, Wee Eck! What will be your raison d’etre after you lose?