As part of the union, Scotland has devolved powers, with more to come no matter what the Yes campaign may say and even if there was a guarantee of no new powers wed still be better in the Union. Scotland also has a secure and stable income from the guaranteed yes thats right the guaranteed Barnett formula as well as its share of the UKs guaranteed EU rebate. We are also backed up by all of the taxpayers in the UK. In an independent Scotland, however, we would be limited to income from Scotland alone. And, without a currency union we would either have to go with our own currency, something that was long ago ruled, or wed have Sterlingisation at least until we joined the EU and were forced to use the Euro something else that was ruled out long ago. With our own currency, the Scottish central bank and therefore lender of last resort, would have to buy lots of foreign currency from Scottish companies that trade abroad in order to maintain a large foreign currency reserves. It would then use that reserve to buy Scottish currency in order to peg the currency to a stable pre set price. However, in the early 90s, when the UK government tried this it failed miserable and caused, what was up until then, one of the largest recessions in our history. So that leaves Sterlingisation, however, under Sterlingisation Scotland wouldnt have a lender of last resort nor any control over interests rates which is one of the most important so called job creating powers there is. Moreover, without a lender of last resort the Scottish government and the banks operating in Scotland would both be much riskier prospect, for other lender, meaning borrowing costs for both of them would go up. The banks would pass that extra costs on to us. While the Scottish Government would effectively have less public money to spend thanks to the higher borrowing cost. The Scottish government could then do one of three things, to make up the short fall, 1) increase taxes 2) cut spending, or 3) both. However, its already said it will lower taxes to attract businesses and increasing spending. But, when economic reality bites the Scottish government wont have much option, but to increase taxes, cut spending or both. Not to mention, when youre borrowing £billions each year the extra costs soon mount up. And, things will only get worse if we refuse to take our fair share of the UK debt because we will be intentional debt defaulters from the first day we start borrowing which will push borrowing costs even higher. Ah, I hear you cry, we will have cut trident and have greater oil revenues by then. Well, Scotlands share of trident is only worth £165 million a year and well only be able to cut it once. The oil revenues, on the other hand, were worth a total of £4.7 billion to the whole of the UK in 2012-13, but oil prices are volatility so wed never have a guaranteed revenue. The financial services sector, in contrast, was worth £8.8 billion to Scottish economy alone in 2010. And, we must remember that 2010 wasnt a particularly bumper year for the financial services sector. However, come independence those companies will go south. And thats a lot of money to lose in any ones book. Whats more, due to the rural nature of Scotland it costs more to do businesses here. A cost which at the moment is spread throughout each businesss UK base. Come independence though, each business could only spread the costs among their Scottish base which will drive up prices. Now, the SNP have said there will be an independence boost to the economy, what they have failed to say is where this boom will come from. So with higher costs and a lower income there will be a squeeze somewhere. The Scottish government may try to delay that squeeze by borrowing even more money, but the squeeze will come sooner or later. While, the extra borrowing will only store up trouble for the future. So, the Scottish NHS short fall due to SNP policies is only the tip of the iceberg. And the SNP are already implementing centre right policies, how long will it be before they are forced, like Greece, to implement must more extreme policies. Remembering of course that the Greek government is left wing but are still having make right wing cut. So all the independence powers in the world wont be much good if the economic reality stops you from using them. And then the Union will look pretty bloody good wont it
Posted on: Wed, 17 Sep 2014 11:37:34 +0000
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