Bill Clinton’s mantra was never more relevant than during the 2014 Scottish referendum.
Despite claims that “The Vow”, which promised devolution of more powers to the Scottish Parliament, secured victory for the No side, post referendum research found that most Scots saw Scotland’s economic future post-independence as the key factor in their decision making.
And it will be again. Last year, recognising the importance of the economy to the debate, the First Minister, set up a Growth Commission chaired by former SNP MSP, Andrew Wilson. It’s task? To look at “how to generate further growth with the powers of independence”.
An essential, if difficult, task given that the 2014 White Paper was built on the assumption that income from North Sea oil would provide a solid basis for economic growth. Indeed John Swinney, then Finance Secretary, argued that independence could coincide with a “second North Sea oil boom”.
That hope was dashed with the oil price crash and an optimistic estimate of $113 a barrel quickly became less than $30 before a recovery to just over $50. Expected income of “almost £48bn” between 2012/13 and 2017/18 evaporated; oil revenues tumbled from an already low of £1.8bn in the 2014-15 financial year to just £60m in 2015-16, a 96% drop.
The Growth Commission is currently assuming that the North Sea would produce zero tax revenues if the second referendum resulted in independence.
Little is yet known about what recommendations the Commission will make. An initial pegging of a Scottish currency to the pound has been discussed; increasing taxes is not seen as advisable and there should be a “steady as she goes” approach to the economy, which Wilson claims should recover to its current position within a 5 to 10 year timescale.
More can be gleaned from the thoughts of George Kerevan MP. Writing in City A.M.in July 2016, Kerevan argued that an independent Scotland could be an “economic powerhouse” within the EU. To achieve that status however, Kerevan argued that “a separate Scottish currency pegged to sterling would necessitate fiscal consolidation to assuage the foreign exchange markets. It would require independent Scotland to cut its budget coat to fit its fiscal means”.
And it would also require “monetization” (privitisation) of Scotland’s “legacy share of UK state assets”.
No doubt more will be revealed in the forthcoming weeks and months but there is a growing feeling in Scotland that perhaps the SNP has put the cart before the horse – announcing its intention to seek a second referendum before it has fully worked out answers to fundamental questions.
