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Scotland: Could it become Greece without the sun?

  • Scottish independence would entail significant economic risk. Scotland’s budget deficit is currently over three times higher than the UK average as a % of GDP.
  • North Sea oil and gas revenue expectations have plunged. Expected revenues of £6.8 to 7.9bn this year have fallen to just £0.5 to 2.8bn.
  • Two thirds of Scotland’s exports go to the rest of the UK but just 15% go to other EU countries, further questioning the economic rationale behind Scottish independence.
  • Euro membership would expose Scotland to the risk of more asymmetric economic shocks, and the European Central Bank would be less capable of responding to shocks compared to the Bank of England.
The EU referendum has exposed wide divisions across nations of the UK. While England voted by a margin of 6 percentage points to leave the EU, Scotland overwhelming supported remaining within the EU. In response, Scotland’s first minister Nicola Sturgeon said that a second referendum on Scottish independence is “on the table” and “highly likely”. This economic bulletin seeks to examine the economic backdrop to the prospect of a second referendum, and whether this backdrop would influence the result of a referendum if it were held over the next few years.

Image: Creative Commons/Scottish Government 

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Daniel Mahoney and Tim Knox - Saturday 2nd July 2016

Daniel joined the Centre for Policy Studies as Head of Economic Research in November 2015. He was promoted to Deputy Director in March 2017. Prior to joining the CPS, he worked in research roles for a number of parliamentarians.

Tim Knox was Director of the CPS from 2011-2017. Before he was Director, Tim was the Editor at the CPS - a position in which he was responsible for publishing papers by every Conservative leader since Mrs Thatcher as well as by hundreds of leading academics and opinion formers.