Friday, 5 September 2014

Scottish independence: fun with numbers

A lot of the English politicians and commentators are saying that if Scotland left the United Kingdom, it would severely weaken the UK's global influence blah blah blah. Well, the UK has little global influence and I don't see why we need it, but let's address the issue.

Let's assume the Scots vote 'Yes' (and I will be laughing like a drain if they do); become an independent country; leave NATO; refuse to accept their share of the UK government debt (while merrily taking their share of UK government assets like roads, bridges and buildings, which is a bit of a cheek) and keep all the North Sea oil revenues to themselves.

What would this mean for the rest of the UK?

Pretty much naff all.

1. The ONS says that the UK population is 64.1 million, an increase of about 5 million since the 2001 census. Scotland's population is 5.3 million. So in population growth terms, that has knocked the UK back about fifteen years.

2. NATO members are supposed to be spending (wasting?) about 2% of their GDP on defence. So that's about £32 billion a year for the UK. Even if the residual UK has to pay for Scotland's 'share', that's an extra cost of about £3 billion a year.

3. The National Debt was a very manageable 40% of GDP until 2007 and has shot up to 89% of GDP since then; financial crises don't come cheap! So it's been going up at 7% a year. If the rest of the UK has to shoulder all of it, that will increase our per capita National Debt by about 9%, in other words, it adds an extra fifteen months' worth of deficit. Which is not good, but not a catastrophe.

4. North Sea oil revenues are dwindling anyway. Over the past few decades, the extra per capita spending in Scotland (aka 'Barnett Formula') has been broadly equal to North Sea oil revenues; so the UK would lose a bit of income but lose a larger amount of extra spending, which is a net win for the rest of the UK and will go towards paying for the extra costs from 2.


Sobers said...

One can also factor in that N sea oil and gas revenues are a declining asset whereas the block funding of Scotland via Westminster is an ongoing (and rising) cost. Thus the rUK swaps a significant drain on resources for a declining revenue source. A solid win for the rUk I'd say,

The Stigler said...

There was some publicity by the Yes campaign about not funding Trident for Scotland and how much it could be spent on something that sounded nice like Schoolsandhospitals, but in reality, the whole UK expenditure for Trident is about the same per year as the Barnett formula.

And I don't mind if the Scots break away, but my guess is that within years it'll become like Wales. That the government will tax everyone up the chuff and all the talented people who can leave will do so.

Mark Wadsworth said...

S, yes that was my bullet point 4, it's a solid win but a very small one.

TS, don't knock Wales or the Welsh. Top country, top people.

Lola said...

FWIW since The Jonah showed up for the No campaign I reckon it was doomed and the Scots will now vote yes.
Since I am absolutely up with the principle of self determination, that's fine and dandy by me.
But, for the next twenty years Salmond will carry blaming England for all the problems the Scots will face under a socialist numpty like him.

The Stigler said...

I don't dislike the Welsh or the country (which is rather lovely), but it's an economic disaster zone outside of the M4 area and a huge amount of the population depend on the state (which can then lead to a spiral of expanding the state because of narrow self-interest).

That's my concern - we'll have decades of blaming the English, more and more centralisation of power and eventually the country becoming McVenezuela as the talent leaves as taxes rise.

I honestly don't know what the Scots think they'll get from independence that is so much better than being ruled by Westminster. Other than having Saltires flapping over all public buildings and having a seat at the UN and being ruled by Scottish incompetents rather than English incompetents, what's the point? What are they going to do that's better than Westminster to make themselves richer or freer? From what I can see they're even more big state than Westminster.

Pablo said...

The Stig,
I have it in my head that there is a lot more chance of an implementation of LVT in an independent Scotland; now where did that idea come from?

Mark Wadsworth said...

L, good point about Jonah :-)

TS, maybe, in which case why not build them some more motorways and railways? That might help.

P, yes, it is slightly more likely that an independent Scotland would have LVT, but it is still unlikely.

It would be great if they did it and their economy took off, but they are nearly as Home-Owner-Ist as the English and Salmond is a big friend of the banks (who would oppose LVT to the hilt).