OK my independence leaning facebook friends, can you help me with 3 quick questions? 1. Currency - either a formal or informal sterling union apparent. A formal union would mean ceding control of monetary policy to the RUK/Bank of England (interest rates and money supply etc) and a large degree of fiscal policy (fiscal constriants as part of the formal union). These are the two key planks of macro economic policy, gone. An informal union would also mean ceding most of monetary policy, and fiscal policy would be hit by high borrowing costs in international money markets (wed be seen as riskier than RUK). So, basically, limited macro economic policy independence (if the Nats were proposing a Scottish currency as a 1st option this would be different, but they didnt have the balls). So, if I vote for independence, its not really independence, is it? (semidependence - is that a word?) 2. Scotland had a fiscal deficit equivalent to 8.3% of GDP in 2012/13 (even if N Sea O&G revenues are counted as Scottish), a worse position than the UK as a whole (7.3%). In other words, public sector spending in Scotland was £12.1bn more than tax revenues generated in Scotland. Thats a pretty big hole. The SNP (who are very likely to win the 2016 election) are proposing raising public spending and cutting corporation tax (so reducing tax revenues) - and this would be on top of the costs of independence (new institutions etc - which are unquantified) and the high possibility of slowing economic growth for a few years (that would hit tax receipts). So, the deficit would get bigger and the hole deeper (and nope, wont find any oil in that hole). How will this be filled? Income taxes up? Doubtful. Increased borrowing? Perhaps, but constrained and expensive (see pt 1 above, and remember lenders dont like countries with big deficits - ask the Greeks, Spaniards and Italians). 3. Independence will mean well have full control over our spending, apparently, to deliver a wealthier and fairer economy. At the moment just over 50% of public spending in Scotland is already devolved, so we have full control over £37bn a yr and how its spent (health vs education vs economic development etc). Of the reserved spending, nearly all of this is welfare spending. Now, Im assuming that the SNP arent proposing cutting welfare (changes could def be made to some elements like getting rid of the ridiculous bedroom tax, but in the big scheme of things this would be tinkering), and a complete overhaul of the welfare system has not been proposed - and would take a long time anyway. So, what exactly would change under independence in terms of where money is spent? What are we going to have MORE control of that will deliver a wealthier and fairer economy? What are we going to have MORE control of that will create jobs? And were not going to have a lot, if any, more money to spend (pts 1 and 2 above). Im only asking like.........
Posted on: Thu, 11 Sep 2014 19:52:01 +0000
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