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20 January 2012

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MaximusClark

On the currency, Scotland is in an interesting position vis a vis foreign currency reserves. Current Scottish notes (the ones printed by the BoS, RBS & Clydesdale) have value because they are backed up by high denomination (up to £100 million)BoE notes in the possesion of the issuing bank. As these would have to be exchanged for the new Scottish currency, or revalued away from parity, these notes would form the basis on which the new Scottish currency is built.

Luggy

Brian - thank you - a nice complement to Martin Wolf's article.

Euan

Oh drivel and more unionist lies with statistics

cynicalHighlander

The major thing that is missing from all of these presumptions over Scotland's economy are meaningless unless they are compared with the rest of the UK. As UK debt is heading towards 1000% of GDP of which over 600% is in the financial sector mainly based in the City the prognosis from the rating agencies must be gloomy.

http://www.debtdeflation.com/blogs/2011/12/31/debt-britannia/

It is often better to jump the ship before it sinks rather than scramble for lifeboats after the event.

cynicalHighlander

Remember Citigroup who accordingly a few weeks ago along with unionist politicians warning about companies investing in Scotland were worried well....

interesting comment issued by Citigroup at 15.59 today :

15.59 We certainly do not rule out a break-up of the UK over time. ONS data suggest that an independent Scotland would have a slightly better fiscal position than the rest of the UK [assuming Scotland gets its geographic share of oil and gas receipts]. Scotland could have a viable future as an independent country, although there are a lot of questions that would have to be resolved before that happens.

Dick Winchester

Brian. You say this re oil revenue: "Two facts stand out: the revenues are variable and, despite the rise in oil prices over the last 10 years, they are in decline."

Actually, I'm always quite surprised at how stable oil revenues have been but I also notice that they are currently twice the level they were in the mid nineties.

Given that barring a global economic collapse the oil price is heading nowhere other than up then I can't see that there's any logic in being particularly pessimistic about overall revenues because price drives development.

Even now with demand in Europe pretty flat the oil price has remained remarkably robust.

Of course it would help if the UK tax regime was as stable as it is in Norway. I note you don't mention the Chancellors recent hike in the supplementary tax rate which caused a lot of companies to reassess their exploration and project plans. This has led to a fall in the number of wells drilled so not the most intelligent of moves. Contrast that of course with Norway where intensive exploration has resulted in the discovery of what's turning out to be the third largest field in the Norwegian sector.

That's the great thing about the oil and gas business. It constantly surprises us. Who knows what's left on the SCS (Scottish Continental Shelf) :-)

Wolf says that Scotland's fiscal future as an independent state depends on its share and the behaviour of North Sea oil revenues and its inherited share of UK government debt.

Well that of course is only part of the story isn't it.

Much also depends on how successful an independent Scotland is at broadening its economy and growing other sectors. In many respects oil and gas should teach us a lesson because of course we actually own so few of the high tech, high value adding, industrially strategically critical companies in both the manufacturing and service bits of the industry.

In fact, Norwegian owned companies are now second only to the US companies in terms of export value and industry importance and that provides an important lesson to Scotland in terms of how their financial sector, industry and Govt work together for their national benefit. Here, we are all acutely aware of how insular "the City" has become and Scottish independence is an opportunity to change that. Our company birth rate is appalling and finding risk equity capital remains incredibly difficult. There was no "trickle down" from the success of the City and I see no indications that will change.

So I'm afraid that broadening the economy is never going to happen whilst we are under the influence of the City and the Treasury. It may take time and it may be a struggle but for the sake of our economy and our society independence is really the only sensible way ahead.

Thegreenplace

Hi Brian,

Your piece is interesting but I tend to agree with Dick Winchester that it makes the mistake of assuming the status quo in a structurally weakening UK economy is better than any possible future. If you look at the productivity figures you mention, and while I accept that productivity is largely due to economic structure which doesn't change radically very fast, rather than concluding from the data that more should be done to raise Scottish productivity rates towards those of the top EU performers, you curiously decide that the figures tie us to the UK's weak performance for ever and the pound to boot.

I'd be interested to read in a future blog what would be your 'recipe' for raising those Scottish productivity figures over the coming decade. And perhaps that could be done in a two scenario approach - remaining in UK versus independence given that the two options leave open different policy routes.

Peter W Jones

I am following the matter of independence for Scotland with interest and find this column and its appended comments refreshingly thoughtful.
My thoughts are these.
At present Scotland receives revenue from the UK Treasury of about £53 billion - based on the Barnet formula of £10,212 per head of population.
If that went under independence and Scotland received the lion share of oil revenue that would bring in about £6 billion based on 2009/10 figures.
I am aware that the previous year brought much higher revenue but I also note that it was an historic exception - in fact it was the highest figure for two decades.
That leaves £47 billion to find and I note that the Scottish Government's own estimate of revenues raised from income tax, national insurance, council tax and so on add up to £42 billion.
That leaves a shortfall of £5 billion.
Am I missing something?

ang

Seperatists need to grow up. The finances of independence are not accurate for or against. What is a fact is that scottish men and women have died fighting for britain. We share one small island with limited resources and should stick together in times of trouble. Nationalist politicians have always brought trouble (balkans, russia ect.) Facists were nationalists. Nationalist politics appeals to the simplest of people and it is sad to see it in scotland. We have a shared history shared family ties and talk of independence is sad to say the least. Alex salmond wants power for himself through gaining more power for the scots

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