In a paper released today, Oil, Finance and Pensions: why Scots should say No, leading economist Tim Morgan has identified three major risks in the event that the Scots vote “yes” to independence.
In response to the report’s evidence, Scottish Finance Secretary John Swinney has attacked the credibility of its author, claiming: “this report is stuffed full of basic factual errors”.
In the following blog post Tim Morgan responds to the criticism:
It is hardly surprising that Mr Swinney is scathing about the CPS report, since it exposes a glaring hole in the "yes" campaign's fiscal projections. We are not the first to expose some of the wishful thinking which informs the "yes" campaign's figures, though the CPS paper may be a particular embarrassment because it supplies detailed numbers, allowing readers to form their own conclusions.
The role of Mrs Thatcher in the foundation of CPS is a cheap shot, as CPS viewpoints have evolved a great deal in the three decades of its existence. The threads of continuity which run through CPS research are the basic belief in individual liberties, a preference for individual choice over state diktat, and a deep-rooted suspicion of big government. CPS itself, and the author of this report in particular, have frequently criticised Conservative policy.
The CPS report does not comment on the proposed 18-month timetable. What the report does question is the assumption that an independent Scotland would gain automatic admission to the EU, and that joining the EU could be accomplished without adopting the Euro. Spain is just one of many EU members which might regard a Scottish precedent as unhelpful.
The idea that a banking move to London would be no more than a matter of "brass plaques" is risible. The purpose of such a move would be to secure the backing of the Bank of England, and the Bank is not in the business of protecting offshore banks whose only real presence in London is brass plaque. Banks moving to England would need to conduct their core activities there if they wish to comply with the regulatory regime which is part-and-parcel of the financial guarantee.
As for "predicting new discoveries", this is nonsensical. That many new fields will be developed in Scottish waters is very probable, but the decline in production from large, cost-effective, mature fields is relentless. After all, UK North Sea output has declined by 62% over ten years, and fell by almost 8% last year alone. New fields will be smaller and costlier than their predecessors. This is quite normal in oil and gas provinces which are past their peak. The discovery of new fields on the scale of Brent, Forties, Stafjord, Ninian and Beryl is extremely unlikely since, if they existed, they would have been found and developed already.
We welcome Mr Swinney's recognition of the CPS point that, stripped of Scottish oil, the rUK current account imbalance would become perilous. This, of course, would be damaging not just to rUK but to an independent Scotland as well, since rUK would remain (a) Scotland's largest trading partner, and (b) the home of Scotland's preferred post-independence currency.