Posted Sep 9, 2014 by Martin Armstrong
It is very interesting to see the numerous emails pouring in from Scotland and England. Even in Scotland there is a strong left-wing socialist factor that has their hand out to whom Cameron is trying to persuade to stay in the UK and they will be rewarded. For the benefit of both England and Scotland, a separation would be fantastic if Scotland took the high road here. If Scotland lowered its taxes including VAT, this will put pressure on England.
Moreover, it has been argued that Scotland costs the British more than they get back. The Government Expenditure and Review Scotland (GERS) calculates how much money is raised through taxes in Scotland and the level of public spending north of the border. The Scottish nationalists argue the number are erroneous. However, the numbers appear to be fairly trustworthy. The GERS figures, for the financial year 2008/09, show that the Treasury spent about £54 billion on Scotland and only received £43.5 billion in revenue.
The Brits believe that the Scots do not pull their own weight. However, there is the question of a very important asset – the North Sea oil. Most of the United Kingdom’s fossil fuel lies off the coast of Scotland – not England. Therefore, the wealth the North Sea Oil generates should arguably be added to figures for total revenue from Scotland that England does not count. This introduces a whole string of important questions if there is a separation. Will this natural resource be returned to an independent Scotland?
Detailed research of the money brought in by the UK oil and gas fields suggests that Scottish waters – defined by the line of demarcation used in the fishing industry – accounted for 91.1 per cent of UK North Sea revenue in 2008/09. This would imply the North Sea Oil reserves belong to Scotland – not England. This further suggests that the reserves of Scotland will add a contribution to Treasury coffers by £11.7 billion, wiping out the £10.5bn deficit and leaving Scotland in the black to the tune of £1.3bn. Of course there will be some volatility. Nevertheless, this is a very interesting aspect.
It’s without question that Scotland would survive as one nation and have reasonable performance. It may even have the LOWEST national debt than anyone in Europe and this is not being factored in to the confidence Scotland would gather in an economic crisis. We input what-ifs into Socrates. It actually supported that the pound could call to new lows and break par with the dollar. Scotland could issue its own pound and if it were to set the standard for the world abandoning state borrowing, the currency could set the pace for others to follow.
Loss of the North Sea oilfields would mean George Osborne would never be able to reap the benefit of a windfall tax on the North Sea operators like the one introduced in the last Budget. Scottish Independence could be the straw that forces reform in Britain. Most of the UK’s renewable energy resources like sites for wind and wave power stations are also in Scotland, so the potential market for exported electricity would be out of Whitehall’s hands as well. When you break everything down, Scotland could stand on its own very nicely. England has gotten the better end of the bargain when everything is considered.
Then there is the financial services industry, which generates between 7 billion and 9 billion pounds ($11 billion to $14 billion) and directly employs around 100,000 people, according to the Scottish Financial Enterprise (SFE), which is an independent body representing Scotland’s financial industry.
The Scottish banking industry accounts for 13% of all banking employment in the UK. The Royal Bank of Scotland, Bank of Scotland, part of Lloyds Banking Group, and Clydesdale Bank are all permitted to print banknotes, a practice that dates back as far as 1695. Scotland has also the world’s oldest professional body for practicing bankers since 1875.
The UK insurance industry is the third-largest in the world and the largest in Europe, employing 320,000 people. However, the Scottish insurance industry may account for one-third. Life and pension fund managers are among the leading industry employers in Scotland.
There are at least 500 funds managing money in Scotland, excluding investment trusts and exchange-traded funds. Assets managed in Scotland were estimated at 560 billion pounds in 2013, 11% of the UK’s total 5 trillion pounds, according to the Investment Management Association. If the EU goes through with its tax on financial transactions, Scotland could really score big in this game staying out of the UK and EU.