Leading economist Tim Morgan identifies three major risks in the event that the Scots vote “yes” to independence.
- New data calculated in this report suggests that the North Sea revenue for the Scottish government would fall from £10.1bn in 2011-12 (but only £5.5bn in 2013-14) to £3.7bn in 2016-17, some £3.2bn adrift of the £6.9bn predicted by the “yes” campaign.
- The probable flight of a large proportion of the financial services sector from Scotland – as already indicated by this week in the announcements by RBD, Lloyds, Clydesdale and Standard Life – could leave 2016-17 ex-North Sea revenues (of £47.7bn) about £9.2bn lower than has been forecast by advocates of independence (£57.3bn).
- The rising cost of public sector pensions would be likely to impose significant pressures on a Scottish budget already straitened by declining oil revenues and the probable haemorrhaging of tax revenues from financial services. The impact is estimated at £1.1 billion in 2015-16.
Together, omission of these three factors results in a severe understatement of independence risk, both to Scots in general and to public sector workers and retirees in particular.
The cumulative impact of these three risks on Scottish government revenues would be £13.8bn in 2015-16. Total government revenues could be £50.4bn, far below the “yes” campaign’s own estimate (£64.2bn) and far lower, too, than the £63.3bn that Scotland is expected to spend in that year.
Tim Morgan also identifies a further significant risk for the rest of the UK which would see a sharp deterioration in its current account balance, from 5.5% of GDP to over 7%.
Morgan concludes: “Unfortunately for Scots, this, too, could have adverse implications for their own economy.”
- Daily Mail: "An Independent Scotland faces a £14 billion black hole in its finance, a prominent think-tank warns today in a report."
- The Times: "The Centre for Policy Studies … claims in report being published today that an independent Scottish Government's revenues in 2015-2016 would be £13.8 billion lower than the yes campaign has claimed"
- The Sun: "Meanwhile influential think-tank The Centre for Policy Studies predicted Scottish revenues of £50.4 billion in 2015-16 instead of the Yes campaign's estimated £64.2 billion."
- The Independent: "A report published today by a leading think-tank suggests that the Yes campaign has underestimated the financial risks of separation"
- The Daily Telegraph: "The triple-whammy of declining oil revenues, fleeing financial services and increasing pension costs would see Scottish Government revenues drop more than £13 billion after a Yes vote, according to the Centre for Policy Studies."
Tim Morgan - Monday 15th September 2014