To be or not to be? Scotland and the UK

looks at how de-unification will impact Scotland and whether it would be ‘better together’

As the Scottish independence referendum looms, the Scottish people must increasingly ask themselves whether it is their wish to break a 307 year-old political union. Previous polls have suggested that a vote for independence would appeal to much of the wider population if it would make them £500 a year better off than they currently are. However whether independence can make Scots richer would become a reality or not is bitterly disputed by the Yes campaign and Better Together.

Much of the basis for Scots becoming richer through independence lies in the potential oil revenue it could receive. Since many of the North Sea oil fields lie off the Scottish coastline, the Scots could potentially keep more of the revenue themselves. Furthermore projections by Alex Salmond show that the oil field can continue to be profitable for the short to medium term, with potential revenues of £7.3 billion by 2017-8. However whether this would materialize in reality remains highly uncertain, since the SNP’s projections depend on the price of oil continuing to rise. Additionally as oil reserves in the North Sea diminish, an independent Scotland would be faced with the costs of decommissioning oil rigs. This could cost an independent Scotland up to £40 billion, according to Oil and Gas UK.

Perhaps realizing that oil cannot be relied upon as a sustainable long-term source of revenue, the Scottish government is looking at expanding other sources of revenue. The whisky industry is already well established in export markets and valued at £3.9 billion. Additionally there are hopes that it might be able to replicate the success of some Scandinavian countries, which have made themselves hubs for IT and technology based industries. However Scottish industry remains at a disadvantage in these sectors, with productivity having been found to be 11% lower there than for the rest of the UK. As things stand exports make up 21% of Scottish GDP, compared to 32% of GDP in Britain.

An independent Scotland is likely to also encounter problems setting up the type of welfare state it aspires towards. Projections by the Office of National Statistics (ONS) suggest that whereas in 2012 there were 3.2 working age people for every Scottish pensioner, by 2037 this will have fallen to just 2.6. This means that unlike the rest of the UK, the proportion of workers in the population will decline. Such a trend is also likely to lead to increasing healthcare costs, as people become more dependent on health provisions as they age. The government would therefore be forced to make difficult decisions on how to fund the increasing costs of healthcare, likely to result in electorally unpopular decisions like less generous pensions, raising the retirement age and higher taxes

All of this does not mean it would be impossible for Scotland to be an economically stable country if it did indeed become an independent nation. With the right set of policies – encouraging investment, making sensible welfare commitments and expansion into new export markets – the country could have a sustainable future. However much of the economic basis for independence does remain highly uncertain, particularly in relation to the policies that the future government would pursue and in relation to oil revenue. Independence would also not change the deep-rooted links the country currently has to the rest of the United Kingdom, reflected in how the UK would be the biggest market for export of Scottish goods. All this means that the Yes Campaign faces a difficult task to convince the Scottish electorate that independence can truly make them better off.

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