Copied from the guardian, I wonder if this is why Gideon is hiking oil taxes to slow oil output? The Institute of Fiscal Studies has warned that Alex Salmonds government has exaggerated the size of Scotlands latest North Sea oil revenues, leaving a deeper shortfall in tax income. The IFS said the Scottish governments forecasts of oil revenues were too optimistic for the last two financial years, and were also double the size of the oil taxes predicted for the first year of independence by the Office for Budget Responsibility. In a new analysis on the current state of the UK economy, the IFS said that the OBR had downgraded Scotlands oil revenues in 2016/17 to £3.3bn, leaving an independent Scotland having to borrow the equivalent of 3.6% of its GDP that year. That prediction was half the size of the oil revenues of £6.8bn-£7.9bn forecast for 2016/17 by the Scottish governments white paper on independence in November – a disparity that highlighted Scotlands vulnerability to fluctuating oil revenues, the IFS said. The IFS added that other forecasters were more optimistic, and cautioned that neither the Scottish government nor the OBR could be sure how much North Sea oil would raise in 2016. What is clear is that fiscal decisions in an independent Scotland would need to be taken in the context of considerable uncertainty over this very important part of the budget – and in the context of long-term pressures both on these revenues and arising from an ageing population, the IFS warned. With one leading industrialist meanwhile insisting he had no problem with independence, Salmonds economic plans were boosted further when one leading expert on the referendum, Professor Charlie Jeffery, said a currency union between Scotland and the UK was perfectly feasible. Prof Jeffery, who is leading a £5m ESRC-funded research programme on the referendum and is director of the academy of government at Edinburgh university, said economic arguments against a currency union used by George Osborne to veto a deal on sterling took second place to the political desire to defeat Salmond at the referendum. Writing before he gave evidence to a Holyrood committee on Wednesday, Jeffery said that while currency unions required painful adjustments and were difficult to run, Whether or not they are established and last has less to do with economics than with political will. Seen from an economic perspective, the eurozone is hugely problematic. Its economies are much more out of synch than Scotlands is with the rest of the UK. Yet it endures because the political will is there for it to endure, both in the governments of the strongest members like Germany and the weakest like Greece, Jeffery wrote. Were there such political will in the Scottish/residual UK context, a sterling currency union would likely be far less problematic than the eurozone. However, Angus Armstrong, a macro-economist from the National Institute of Economic and Social Research, said that Osbornes veto on a currency pact was a severe test for Salmonds economic strategy. Armstrong, also writing in advance of the Holyrood committee hearing, said major Scottish banks and financial institutions would be likely to flee Scotland if Salmond pursued the dollarisation option, where Scotland would use the pound without a formal deal. Armstrong said using sterling informally would be risky and require significant taxpayer backing to set up a new central bank rich enough to guarantee deposits or a UK government deal to insure Scottish banks. Without that deal, many institutions would change their domicile. Apart from the serious impact on employment, income and tax on Scotlands second largest onshore economic sector, it would mean a dramatic reduction in the export of financial services to the rest of the UK. Salmond said Osbornes decision to rule out sharing currency with an independent Scotland will prove to be a monumental error. At a lecture hosted by the New Statesman in London on Tuesday Salmond said: In the last three weeks people in Scotland have seen an array of approaches from the UK government – what they apparently call their Dambusters strategy. We were love-bombed from a distance by David Cameron, then dive-bombed at close range by George Osborne. The UK cabinet came up to Aberdeen, but chose not to meet the members of the public. I believe that George Osbornes speech on sterling three weeks ago – the sermon on the pound – will come to be seen as monumental an error as Margaret Thatchers sermon on the mound some 25 years ago. It encapsulates diktats from on high which are not the strength of the Westminster elite, rather, theyre a fundamental weakness. I want to make a contrast – and we shall make a contrast – that we shall seek to engage with the people of England on the case for progressive reform. Jeffery also rebuffed an outspoken attack by European commission president José Manuel Barroso on Scotlands chances of joining the EU in parallel with its independence talks with the UK. He said Barrosos personal views were largely irrelevant as he is about to step down as commission president, and he had no influence over what would happen after a yes vote in Septembers referendum. Contrary to Barroso, the conclusion of almost all independent expert analysis is that Scottish EU membership would be uninterrupted, though the process of attaining membership as an independent state and the terms of that membership would likely be subject to difficult negotiations, Jeffery said. Nigel Stein, chief executive of the engineering firm GKN, told industrialists in London that independence would not affect his firms business, but a threat to leave the European Union after a referendum in 2017 would be damaging. Speaking at the Engineering Employers Federation annual conference, Stein said: The prospect of the UK talking itself into an exit would be deeply harmful to our industry. Uncertainty over the UKs position in Europe is being used against us by our competitors. A Scottish government spokesman said: There is no doubt that Scotland can more than afford to become an independent country, and as Standard and Poors noted last week, even without North Sea oil and calculating per capita GDP looking only at onshore income, Scotland would qualify for their highest economic assessment.
Posted on: Wed, 05 Mar 2014 01:04:37 +0000
Trending Topics
Recently Viewed Topics
© 2015