Thursday, December 14, 2006

The McCrone Report and Scotland's balance of payments


Truth is, numbers add up for independence

The McCrone report said: "The balance of payments gain for Scotland from the North Sea oil would easily swamp the existing deficit whatever its size and transform Scotland into a country with a substantial and chronic surplus - to a quite embarrassing degree and its [Scotland's] currency would become the hardest in Europe, with the exception, perhaps of the Norwegian kroner."

The report continued: "An exchange rate of £1 Scots to 120p sterling within two years of independence, therefore, would seem quite probable": "An independent Scotland could now expect to have massive surpluses both on its budget and on its balance of payments and with proper husbanding of resources this situation could last for a very long time into the future": "Britain is now counting so heavily on North Sea oil to redress its balance of payments that it is easy to imagine England in dire straits without it": "The example of Norwegian policy on government revenue from oil likewise shows up the failure of British [policy]."
‘Politics of grievance’ have some justification

From an article by Alex Salmond in the Financial Times:

"With the Dublin government free to choose the right policies to give Ireland an economic edge – lower corporation tax, full engagement with the EU and a national investment in skills and education – it has soared past the UK to become one of the world’s wealthiest half-dozen nations. Last month, Ireland was judged the fourth best place in the world to live by the United Nations, leaving Britain (and Scotland) trailing...

"We are only about halfway through the North Sea oil revolution in resource terms and the expectation is for a continuing rise in prices over the medium term. The Scottish National party’s approach to oil is to control the resource for the long term – as Norway has done through a capital investment fund... To our west is Ireland, the fourth most successful country in the index; to our north, Iceland, the second; and to our east Norway, for the sixth year in a row the top country for quality of life. These nations, all also in the top six in terms of gross domestic product per head, form an arc of prosperity that Scotland must aspire to join.

"Scotland has as much talent, energy and enthusiasm as these nations. Our people are as skilled; our geography, if anything, offers more advantages. Only Norway could claim to match Scotland in terms of natural resources. Why are these nations powering ahead, while Scotland’s economy slumbers? I believe independence is the key. Norway, Ireland, Iceland, Finland, Denmark and Sweden are all comparable nations to Scotland, each with the freedom to find the best way to enable their economy to compete.

"Not one would leave their success to another nation or tolerate the whining defeatism that is the miserable excuse for unionism in Scotland – the extraordinary proposition that somehow Scotland is uniquely incapable of managing a successful economy." - Alex Salmond.
Is an independent Scotland economically viable?

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