|How long will the oil last?|
A benefit of independence would be that politicians could tailor new laws and policies to better fit Scotland’s specific needs without the restraint of them being valid for the rest of the UK. Despite this, some argue that the current union still allow Scotland a significant amount of control over the country, such as with its unique education spending. Also, being part of a union allows it to benefit from the stability of trading and banking on a larger scale, and allows all of the nations to better compete with the huge economies like those of China and the US. Therefore, although tailoring their own policies could increase their efficiency and possibly improve the welfare of Scottish people, I feel these benefits are outweighed by the fact that it would hugely decrease the size and power of both the economies.In addition to this, fewer new businesses are being created in Scotland on average than in the rest of the UK, possibly due to the significant influence over jobs that large nationalised companies had over Scotland after it struggled to adapt after the decline of the UK’s manufacturing industry. Another point to consider is that Scotland will have less money ‘in the pot’ to invest, and might find borrowing for hard as their new economy has no independent history to prove their reliability to pay back debts. However, Scottish people may feel more ambitious and aspirational with independence and the country is renowned for investment into infrastructure and other long-term aggregate supply increasing projects, possibly reassuring potential lenders. This benefit, although long term, is definitely not guaranteed, and contrasted by the fact that Scotland still spends a lot more money than it has coming in, so its budget and inegibility to borrow could be significant issues it would have to find solutions to.
Another point is that Scotland would have to take their relative proportion-from-population of the UK’s deficit, meaning they would have to pay the rest of the UK roughly 1% higher interest on the debt until their 8.5% share of the deficit is paid off. This would make them significantly worse off, and the opportunity cost would have to be weighed up to the benefit of their freedom. Another issue would be with the currency union as Scotland wants to keep the pound, arguing that it wouldn’t turn out like the Euro-Zone Crisis as our two economies are so similar. However, if it is decided Sotland do not keep the pound, there would be a negative shock on the trading between the UK and Scotland as transaction costs would inevitably negatively affect Scotland’s new balance of trade as two thirds of its exports are to the rest of the UK.