Where is the economic honesty in the independence debate?
Robert Hoskins says it’s almost impossible to find an argument for Scottish independence which includes a critique of its economic effects, and says the national debate is dangerously deluded as a result.
It is a rare political phenomenon indeed when a narrative comes along which dominates both the Scottish and UK political landscapes at the same time. It’s even more surprising when said narrative is being promoted uncritically by both left and right, not only uniting the Record and the Sun, the Guardian and the Telegraph but also the New Statesman and the Economist as well as being articulated by heavyweight politicians such as Gordon Brown and William Hague. The narrative goes something like this:
Scotland voted overwhelmingly to remain in the EU whilst the UK voted for Brexit, and it now looks likely that the UK could crash out of the EU on October 31st with no deal. Brexit has also fuelled the rise of English nationalism which looks likely to propel Boris Johnston into Downing Street. A Boris Johnson premiership, promoting a Brexit that Scotland did not vote for could ratchet up the grievance machine to warp factor 10. When you also factor in Johnson’s previous anti Scottish statements suggesting that there are too many Scottish MPs in Westminster and wanting to cut the Barnett Formula you have full lift off to the final frontier of independence.
It has to be said that there does appear to be an element of polling evidence supporting this narrative. It would appear that Brexit is shifting opinion in favour of independence as Remain voters who up until April were split evenly between No and Yes are now breaking 51% for independence and 42% for the union. A hypothetical poll also demonstrated that 53% of Scots would vote to leave the Union if Johnson became prime minister.
If this trend continues (with Boris still to be anointed there is no real reason to suggest that it won’t), it would appear inevitable that future opinion polls might be about to register a slender majority for independence for the first time in over two and a half years. So all this evidence would suggest that the future for the survival of the Union couldn’t be gloomier apparently, with a majority for the first time now appearing to be in favour of having a 2nd independence referendum within the next 5 years.
So are the tabloids, broadsheets, political journals and politicians right? Is an independent Scotland the inevitable outcome of the combination of a hard Brexit and a Bojo premiership?
What these articles and speeches are probably reflecting is that emotional attachments to the union are being stretched to breaking point at the thought of this happening. What they are most certainly not reflecting is an informed decision on whether Scotland should be independent, based on any economic reality of what an independent Scotland would look like.
Because the extraordinary thing is that every one of these articles and speeches has been made devoid of any reference to what the economic landscape of an independent Scotland would be, thus depriving the reader and listener of making an informed decision. What this whole episode has demonstrated yet again is that it would appear to be an impossible journalistic and rhetorical task to actively promote independence or to warn about the imminent possibility of it AND provide an honest critique of its financial cost in the same article or speech.
In fact, here’s a thought: have you ever listened to a speech or read a pro independence article or an article warning about the impending breakup of the UK that has mentioned any one of the following?
- An independent Scotland’s finances would be far worse now because of a plummeting oil price than they were in 2014.
- The financial impact of Scottish independence on Scotland’s economy would be 8 times worse than the economic impact of a hard Brexit.
- Scotland has a £13.4 billion fiscal deficit which amounts to more than the whole annual NHS budget. Reducing this deficit would cause austerity max and require public services to be slashed and taxes to dramatically rise to reduce it.
- If Scotland becomes independent, it has a £120 billion population share of UK debt to pay off over a 20 year period at £6 billion per year which would cost £5 billion per year in interest to borrow.
- According to the SNP’s Growth Commission Report, Scotland’s banks would move their headquarters down south paving the way for other sectors such as Scotland’s insurance and pensions sector to possibly follow suit.
- A further £1.5 billion would be required to set up the institutions necessary to start a new country;
- A minimum of £40 billion of foreign currency reserves would need to be found to fund our own currency which is the SNP’s favourite currency solution.
- This new currency would be pegged to sterling which would be ripe for being targeted by money markets, resulting in the new Scots currency being worth less than Sterling which would see the value of wages and pensions drop with mortgage payments rising dramatically as a result.
- An additional financial burden on Scotland’s business sector would be transaction costs which would make goods and services being traded in currencies of different values between Scotland and its main trading partner the rest of the UK more expensive as a result.
In fact I would wager if you did a vox pop of any of these inconvenient truths anywhere in Scotland only a handful of the electorate would be familiar with any of them, let alone all of them. This is a damning indictment on the quality of political debate that there has been when it comes to discussing Scottish independence.
The only significant economic debate which occurred in the 2014 referendum campaign was limited to which currency an independent Scotland would use. This debate ironically turned out to be the one which punctured any hope of Scotland leaving the UK as the electorate realised what the dire financial consequences would be of not being in a currency union.
My hunch is that austerity max trumps any and every argument for independence and that’s why articles by pro indy journalists which mention the economics of independence are as rare as hen’s teeth.
And by the way it is not true that people don’t vote to make themselves poorer; they do. For example, the next Labour government will ask those earning over £80,000 to pay more tax. This act of enforced altruism will not impede some high earners voting Labour as they see their financial sacrifice as manageable and as benefiting the many. However, people do not knowingly vote to put themselves, their families and their country into financial hardship possibly for more than a generation, which is what would happen if Scotland became independent.
It is indeed ironic that in 2016 the SNP gave itself the very same task of making independence sound a better option than the eye watering austerity that would come with it when it asked Andrew Wilson to form the Sustainable Growth Commission to do just that. More than two years later the new economic case for independence was finally launched and was widely condemned by a slew of economists for producing proposals which were not backed up by evidence and would lead to economic atrophy and eye watering austerity. The Commission’s author has refused to defend his work from its many critics which would suggest that there is more than an element of truth to their critique.
Meanwhile, the next time you read a pro indy article or listen to a pro indy speech – ask yourself does said article or speech have an economic critique of the cost of independence? Believe me, it won’t have, as it is an impossible task to write or deliver one and still say independence is better with the eye watering austerity that would come with it. What the article will have instead, if it is written by a nationalist supporting journalist or even by the First Minister herself who believes that ”Independence transcends Brexit, oil and the economy” is resorts to euphemisms such as ”significant economic challenges lie ahead” instead of specifying what those challenges are in order to deliberately underplay the magnitude of the economic problems an independent Scotland would face.
We as an electorate deserve better than having discussions of constitutional issues stripped of their economic context. The truth is that a credible case for independence can only be made when it is debated or written in an economic vacuum.
If there is to be a 2nd independence referendum it is absolutely vital that the electorate are fully informed of all the economic factors that would impact a new independent country, not just what currency Scotland would use. New innovative ways must be found to get this information into the mainstream for debate. One way of doing this would be to have a televised series of debates between economists – not politicians – on either side of the constitutional divide which focused on different aspects of the economics of independence, including currency, impact on pensions, deficit and debt and capital flight. This would be a much welcomed start. But until such times may I suggest that we should all be challenging pro-indy articles which are devoid of economic critique by responding to them asking which taxes they are going to increase and which public services they are going to slash to pay for it.