Ten reasons to be confident of independent Scotland's economic future
Scotland is at a crossroads - should it remain as a region of a stagnant, Brexit-bound UK economy - or step out confidently into an independent future? Last week the Scottish government published a report on how an independent Scotland can build a strong economy, one that is fairer, greener, stronger and considers the wellbeing of the nation as well as its economic growth potential. The report itself was barely covered by the Unionist media - who confined themselves to reporting on the press launch and trotting out the usual attack lines. However, it has been well received by those who have actually read it.
The report looks at how Scotland is performing at the moment; where are the barriers to growth and offers a road map for an independent future. Scotland starts from a position behind that of the UK - it has a lot of undeveloped potential; rejoining the EU will be a huge boost; and an independent Scotland can make the most of its natural and human resources.
Here are some of the ways Scotland can build a better economic future for all. (Unless otherwise linked, facts and figures are drawn from the report.)
1 Scotland’s economy is on an upward trajectory compared with the UK
When the Scottish Parliament was reconvened in 1999, Scotland’s economy was lagging behind England’s. Wages were lower, the productivity of Scottish workers was far below that of English workers, and there were few opportunities. In those days, the public sector was the biggest employer.
Now, the biggest employer is business services and finance, at almost 30%. Scotland is the only part of the UK where productivity is increasing significantly. While productivity has barely changed in the UK, Scotland has gone from being 8% behind to just 2% behind. Average wages are also rising at a faster rate in Scotland and have come from a lower base to equal the UK average. Scotland is now one of the wealthiest parts of the UK, with the highest GDP per capita of any of the UK’s nations or regions, outside London and the South East.
Devolution has helped Scotland but there is still a long way to go. Westminster still controls most of the economic levers, and imposes policies that don't work for Scotland. Scotland and the UK are now falling behind EU countries in terms of average income, income inequality and the situation of the poorest in society. An independent Scotland could regain some of the ground lost since Brexit by focusing on a well-being socio-economic approach.
2 Scotland already leads the UK in terms of green jobs and growth
The Green Growth Index by Oxford Economics, commissioned by the Lloyds Banking Group, places Scotland first in the UK for green economy opportunities. This reflects Scotland’s existing green industrial base with a growing number of green jobs and innovation activity, access to skills and training, and development of the renewable energy infrastructure.
With independence, Scotland could make longer-term planning and investment decisions - ones that are no longer dependent on the ‘Barnett consequentials’ of ever-changing policies made by Westminster governments Scotland didn’t elect.
3 Vibrant sectors include life sciences, space, and gaming
The professional, scientific, and technical activities sector is now the largest sector in Scotland in terms of the number of businesses, and is growing 1.5 times faster than the economy overall.
Scotland has one of the biggest life sciences clusters in Europe with world-leading expertise in drug discovery, medical technologies and agri-tech. Almost 20% of all UK jobs in the space sector are based in Scotland. Scotland currently produces more small satellites than any other country in Europe. Another strong area is gaming, centred on the Dundee video games cluster. These sectors are all international - they will benefit from Scotland rejoining the EU and the return of free movement.
4 Scotland’s population is the most highly educated in Europe
Scotland has a higher share of the population aged 25 to 64 years with a tertiary (degree level) education than any country in the EU. It stands 8 places higher than the UK in the table, reflecting a broad education, and greater equality of access than in the rest of the UK. The University sector will benefit from rejoining Erasmus which used to see thousands of Scots study abroad each year; and from rejoining Horizon, the world’s biggest science fund.
5 Independent Scotland will be in a stronger economic position than as part of UK
The current assessment of Scotland’s financial position is called ‘GERS”. Unionists often say that it shows a deficit. About £75 billion in raised in total from tax in Scotland; and roughly £56 billion of that comes back to Holyrood. Westminster says it spends the remaining £19 billion, plus another £20bn or so, on Scotland’s behalf, on things like welfare, defence, and servicing the national debt, leaving a nominal ‘deficit’ of £20 billion.
But this sum reflects the fact that the UK government controls policy and regulation. So for example, the UK chooses to tax oil and gas lightly at source - but to take in a lot of revenue at the petrol pump (£26bn), which is almost all tax raised in England. The pattern is repeated with other assets like whisky and renewable electricity. Under independence, Scotland will control tax policy and can ensure it works to Scotland’s advantage rather than Westminster’s.
6 Rejoining the EU will deliver massive benefits to trade
The economic opportunities for Scotland of re-joining the EU as a member state in her own right for the first time are potentially enormous. The EU is the largest single market in the world. The most recent available data, for 2019, shows that the value of Scotland’s manufactured goods exports to the EU and the rest of the world was £19 billion - almost double the value of exports to the rest of the United Kingdom - £11 billion.
If Scotland can increase export levels to the same as other comparable high-performing countries, that will deliver a boost to prosperity and tax revenues. The top target countries for increasing exports are almost all within the European single market.
7 independent Scotland will control immigration
Scotland's immigration needs are different from England’s. Scotland has an older population, particularly in the Highlands and Islands. In the Western Isles, the average age will soon reach 50, and the rest of the Highlands is not far behind. Scotland’s average age is 42. The shortage of younger workers is impacting the economy - there is just not the pool of people available that are needed by local businesses, health and social care and so on.
Scotland’s population at the time of the Union in 1707, was about one-fifth of England and Wales’s. But today the figure is about one-twelfth of the overall UK population. Free movement will increase the pool of workers. Independent Scotland will also be able to set its own figures for things like the salary levels needed for a visa, the number and cost of agricultural visas, student work visas, and so on, at an appropriate level for Scotland’s needs.
8 Independent Scotland will have one of the largest marine zones in Europe
As an independent member state of the EU, Scotland’s marine zone would be the fourth largest of EU member states’ core waters; larger, for example, than those of Ireland, France or Portugal. These waters are not only significant geographically, but are also among the richest in the world in terms of fisheries, marine biodiversity, and offshore renewable energy potential.
9 Independent Scotland can make the most of vast renewable potential
Scotland’s renewable energy potential is vast. In 2021, Scotland generated enough renewable electricity to power all households in Scotland for three years, and exported electricity with an estimated wholesale market value of £2.4 billion. And in the coming decades the potential to create and export energy from onshore, and offshore wind, hydrogen, carbon capture, solar, pumped hydro is enormous.
Currently, the UK government and the privatised National Grid decide how energy is regulated, paid for and taxed. An independent Scotland could ensure the long-term affordability of electricity, as its offshore and onshore wind farms provide electricity at a lower cost than nuclear or gas power plants, which the UK relies on.
10 Independent Scotland will set up a £20 billion investment fund
The report from the Scottish government sets out plans to take oil and gas and other windfall income out of day-to-day spending and instead invest it “for the long-term benefit of the Scottish people.”
The aims of the “Building a New Scotland Fund” would be to enable the transition to net zero - it will be used, for example, to fund investment in insulating existing homes and to build new ones that are easier to heat.
Conclusion
Scotland has so many reasons to benefit from independence. Scotland’s constitutional choice has become much starker than it was in 2014. To stick with a chaotic, Brexit-bound, increasingly unequal UK suffering from a collapse in political governance and international credibility? Or set out on the path towards becoming more prosperous, sustainable and fairer, like most comparable European countries?
We think most Scots will choose the latter.
Further reading
Read “A Stronger Economy with Independence” report