Scottish Independence and Economic Instability

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by PATRICK MOLLOY

BOLOGNA — 307 years after unification, Scotland faced the prospect of independence. This came alongside the prospect of economic instability due to the volatility of the price of oil, a rapidly aging population and a potentially significant budget deficit. These conditions are not dissimilar from the very things that led Scotland to unification in 1707.

Estimations of the degree of Scottish economic instability suggest that Scotland, including its oil revenues, would run a deficit of £12.1 billion for the year 2012-13. This places Scotland with a higher deficit to GDP level than the rest of the U.K. Without oil revenues this jumps to £17.6 billion, or approximately 14 percent of GDP. This deficit, combined with its aging demographics and the support they require, would reduce the flexibility that a small state requires to become economically dynamic, and thus healthy.

As a result, Scotland faces massive uncertainty about where its future lies, irrespective of independence. The difference is that this decision can be taken within a space of security and support, where standards of living will not be affected by the variance of price per barrel, or not. Scotland may have an independent future, but it will not be a short or easy ride to prosperity.

It took the member who last left the union nearly 80 years to move from massive unemployment, emigration and dependence on the U.K. market to a footing reflective of a modern dynamic small state. This process also required substantial EU funding and support that is unlikely to be given to Scotland in the same manner or quantity, if Scotland is even entitled to immediate membership to begin with.

There is no doubt about the existence of Scottish identity or culture. This argument does doubt the grass is much greener on the independent side, at least immediately, and consequently greater devolution offers Scots a more stable future.