Dreamed of elections in Scotland, with a new referendum on independence

May 6 in Scotland Citizens will vote to elect 129 members The Scottish Parliament. The party or coalition that gets the most seats will form the new government. This consultation also carries another important meaning: a possible victory for nationalist parties would bring the issue of the country’s secession from the United Kingdom back onto the political agenda. However, while support for the independence cause is close to 50 percent according to some opinion polls, it will be difficult for them to win support for the cause of independence. The second referendum, Due to strong opposition from the British government to Boris Johnson.

To say that Oxford Economics, Which analyzes in the report the economic results of a possible divorce. On the other hand, the Great Britain It will lose a dozen of its GDP; On the other hand, the small Scottish economy would end up carrying large public debt. Moreover, the importance of crude oil reserves in North Sea It is gradually shrinking: “The financial impact of secession could be in favor of the rest of the United Kingdom more than it has been in the past,” says the British organization’s study.

Researchers have assessed the political possibility of holding a new referendum. And they tried to understand the economic impact that the declaration of independence would have. It’s not just an intellectual exercise, given that such a perspective is realistic: As the graph shows, support for “yes” throughout 2020 represents a share of voting intentions exceeding 50 percent of the total, although in the past months in the new year, This value dropped to 45 percent.

The first step towards Scotland’s exit from the United Kingdom would be victory in the May elections Snp (Scottish National Party Scottish National Party), if he succeeds Alba e Scottish Greens To secure the majority. However, the success of the consultations will not translate into an automatic call for a new referendum. The latter, in fact, should be authorized Westminster Through what is called “Section 30 systemBasically a law permitting parliament Holyrood To pass legislation in areas that would normally be reserved for the United Kingdom. But Prime Minister Boris Johnson previously indicated that after defeating the separatists in the 2014 consultations (55% voted to remain in the UK), it would be necessary to wait at least 40 years before organizing another one. The Scottish independence referendum should be held Once in every generationThe British Prime Minister emphasized.

If the pro-independence parties win and London is not granted permission to hold a new referendum, then the Scottish government may at this point decide to go ahead and continue to hold consultations, “similar to what happened with the referendum. Catalonia For the year 2017, analysis signed by the economist Martin Beck. “But trade unionists in Scotland can boycott an informal vote, which undermines its turnout and its legitimacy, as happened in Catalonia, where 92 percent of the participants voted in favor of independence from Spain, but the turnout stopped at 43. percent.” At the same time, the consensus on a “yes” to a Scottish divorce has fallen below 50 per cent since the start of 2021: “So, even if the British Executive changes its mind, it is definitely not an outcome in favor of independence.”

The Economic Effects of the Scottish Vote

To understand the impact of a potential divorce on the accounts London Based on EdinburghIn this regard, it is necessary to assess the economic weight of Scotland to the British Isle. Excluding hydrocarbon mining activities, this equates to 7.4 percent of Total added value (Gva) from the UK. Also adding Oil and gas production (Dividing it between the UK and Scotland on the basis of a geographical criterion – more appropriate for the second criterion – and not on the basis of proportion of population), this value would be just over 8%. The volatile nature of the prices and production of these natural resources strongly influenced the weight of Scottish economic activity in the rest of the country: in the mid-1980s, they accounted for 6 per cent of UK GDP, but since 2018 their share has decreased to 0.8 per cent.

From the point of view tax, Scotland generated 7.9 per cent of UK government revenue between 2019 and 2020. Also taking into account tax revenue from mining, this share would increase to 8 per cent. The lower impact reflects the fact that oil and gas revenues are relatively small. During the peak production period in the mid-1980s, the sector provided 8 percent of UK tax revenue. But in 2019-2020, tax revenue of less than £ 0.9 billion accounted for only 0.1 percent of the country’s total tax. Its share could drop further in the coming years, according toBudget Responsibility OfficeHe explains the economics of Oxford.

on the side public expenditureScotland, which also has a relatively low tax base, benefits from it much more than other parts of the country. Specifically, in 2019-2020, the premium per capita was £ 11,556 per capita, which is £ 1,671 (or more than 17%) more generous than the British average. In that period, Scotland’s fiscal deficit was equal to 9.4% of GDP, excluding extractive activities linked to the North Sea: given the revenue from the latter, it decreased to 8.6%. The UK deficit was 2.6 per cent of GDP.

An important issue that has ramifications Public debt, Particularly about how this is divided between independent Scotland and the rest of the United Kingdom. If we consider the principle adopted, for example with the separation of Czechoslovakia in 1993 – which divided the national debt on the basis of population – then Scotland would end up with a debt of £ 205 billion in 2021-2022, or 115% of Scottish GDP. : A high value when compared to other countries in the old continent of similar size.

Finally, the Financial implications. What currency will independent Scotland adopt? The current position of SNP is to hold the pound for a certain period of time after the divorce, but without a monetary union and with a new currency to be introduced thereafter as soon as possible. Given the deep trade links with the UK, this choice may make sense: In 2018, researchers from the UK Organization recall, 60 per cent of Scottish exports of goods and services were destined for the rest of the British island, and it was equal to a third. Of the Scottish GDP; At the same time, just over 60 per cent of its imports came from the rest of the UK. “But using the British pound without access to the Bank of England would mean for Scottish financial institutions a loss of support for the Bank of England as a“ lender of last resort, ”as the study states, confirming how the country risks paying higher interest rates for financing, especially given the size of the budget deficit. Oxford Economics experts concluded that “the combination of a large fiscal deficit and weakness in the face of high interest rates may force independent Scotland to adopt austerity policies.”

Earl Warner

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