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19 November 2012

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Dick Winchester

The other topic the IFS fails to consider is the £40bn annual benefit the oil and gas industry brings to the UK's balance of payments by way of services and products the majority of which will be coming from the NE of Scotland. This figure was mentioned in an interviw by the BBC's Douglas Fraser with Ian Wood.

Independence would of course transfer most of this £40bn benefit to Scotland providing it with an immediate and substantial trade surplus whilst the "rump" of the UK's trade deficit would almost double.

It would therefore seem likely that an independent Scotland's credit rating would be more than secure and its borrowing costs quite possibly lower than what remains of the UK.

Neil

"Independence would of course transfer most of this £40bn benefit to Scotland providing it with an immediate and substantial trade surplus whilst the "rump" of the UK's trade deficit would almost double."

It doesn't answer the question about what is a declining resource which will never again reach 1999 levels and which will probably see saw up and down in price (albeit with an upward trend)making budgeting difficult. In addition the effect would surely be inflationary with imported goods rocketing in price?

Dick Winchester

Yes - it's a declining resource although it is generally accepted that there is another 25 billion barrels to be recovered with a value of 2,500 billion dollars. That figure is of course a "today" figure and doesn't take into account potential future finds and improvements in recovery rates. Norway has recently found a couple of very large fields of over 1bn barrels so it's never sensible to say never in the oil and gas industry!

It's also accepted that on present estimates there is another thirty to forty years worth of production left although BP has been talking about 50 years for new W of Shetland finds.

However, the point is that all this gives Scotland plenty of time to diversify its industry and to properly grow other sectors. It must be remembered that one of the huge problems the Scottish economy has is exceptionally low R&D levels and very poor levels of investment in start-ups, spin-outs and especially growing companies. Independence and access to our oil revenues, should help cure or at least improve that situation

Grant

It should also be pointed out that the "peak oil in 1999 argument" is most certainly a red herring. There is certainly less oil extracted from the mature North Sea basin now than in 1999, but revenues are considerably higher now than they were in 1999.

In 1999/2000 total UK oil revenues were £2,510m

In 2011/12 they were £11,250m

Source: http://www.hmrc.gov.uk/stats/corporate_tax/table11-11.pdf

cynicalHighlander

I think I would rather have oil than Losses on bailed out banks and lies about public debts to base my income on.

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"Independent of course will transfer the benefits of most of the £40 billion provides it immediately Scotland and huge trade surplus, and" residual "British trade deficit will be doubled.

Tony Little

The IFS report is a good basis for a proper discussion, and both sides of the argument need to be more open about their respective thinking. Less "posturing" and more fact-based discussion would be welcome. It is a shame that the MSM in Scotland is only interested in picking up the negatives from the report, and the BBC Scotland has yet to demonstrate to me that they are able to present information in an unbiased way. Hopefully that will change.

However, what this report appears to overlook completely is the expenditure side of the case. To take only one example: Trident.

Assuming that the SNP government are re-elected in 2016 with a manifesto commitment to rid the country of WMD, there will be millions of immediate savings, and billions in the next 25 years. Consider these savings with the revenue and the net impact is a far healthier economy. Time enough to reconfigure it for the 21st century.

The question that the pro-Union parties have to answer, is what will they do to improve Scotland (economically, socially, health etc.) if Scots vote to remain dependent on the political whim of Westminster?

A_D_McLean

A disappointingly partisan conclusion

"And it is a strong antidote to the SNP government's posturing that under independence each person in Scotland would be £500 better off."

The IFS report is a much bigger antidote to the unionist argument, run over many years, that Scotland is, of necessity, dependent on transfers of funding from wealthier parts of the UK.

The IFS report summarises the position as:

"Ignoring North Sea oil and gas, Scottish tax revenues per head are almost the same as the UK average."

Disappointed you didn't welcome that corrective to the ridiculous notion propagated by Iain Duncan Smith that Scotland will not be able to afford its welfare bill if it leaves the Union. http://bit.ly/QlDyi2

Huge transfers of resources take place between Scotland and the UK, in both directions, with Scotland losing much of the economic impact of its own tax revenues along the way. Post-independence, these flows would reduce, and Scotland could use its tax base to build its economy instead of to fund the higher welfare spend flowing from its relative economic decline.


Brian Ashcroft

No, sorry, your point about revenues per head being similar is, with respect, irrelevant. The issue is the extent to which spending per head is greater in Scotland than in UK/rUK. Even with a geographical share of oil Scotland has run a sizable 'deficit' since the 1990s. Things have got better with a high oil price. But with falling oil revenues in prospect - see OBR forecast - there is a question, as IFS note, about the sustainability of Scotland's current fiscal outlays. So maybe Ian Duncan Smith has a point.

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