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Maybe the Scots should vote Yes. It would save the rest of us a fortune


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On September 18th, the Scots will have a choice. Stay in the United Kingdom, and live off English money. Or vote to be independent, and still live off English money.

Scottish IndependenceOf course, if any Scot reads that first line, they will spit feathers. However, I think I am perfectly justified to articulate the point that, in fact, Scotland isn’t a large economy and it spends far more that it raises in tax.

It is a very popular argument for the Yes Campaign to continue to say that Scotland raises more tax per head than any other country in the UK. This may be so, but such a statement is very misleading indeed.

For one, this does not reflect total tax take. Let’s take the financial year 2012/2013, where Scotland raised a total of £51bn in taxation. In return, Scotland received a total of £65bn in public spending back.

Now, of course Yes Campaigners will argue that Scotland doesn’t get back the £65bn in full, because the devolved Scottish Parliament only controls £36bn of that latter figure. Yet, the clue is in the title, the Scottish Government can only control a budget for areas that it controls. So far, so simple. I imagine.

The other £29bn is spent on un-devolved areas, such as Scottish pensions, welfare payments, defence, foreign affairs and public sector pay. In contrast, take England, which generated over £329bn in tax revenue in 2012/2013. What’s clear is that money doesn’t grow on trees, as the Nationalists like to pretend.

The Scottish Government is already running on a budget deficit of £14bn, with no way of paying it back. This, on top of the projected £165bn debt share upon separation, will leave Scotland with an eye-watering black hole in its public finances. Nobody is saying that Scotland isn’t a productive country; yet, lets adopt a little common sense and gain some perspective here.

Oil revenues are plummeting. In 2013, they peaked at £5bn, down a whopping 30% from the year before. Whisky revenues have dropped like a stone, with 40% fall in production this year (also, without the aid of British embassies promoting Scotch abroad, revenues will likely fall further).

So this begs the question, why on earth would the rest of the UK agree to a currency union with such a country? A currency union requires a fiscal union which, in turn, requires a political union.

It will require Scotland to give up control of its interest rates, mortgage rates, borrowing and spending levels, as well as inflation control. SO you might actually ask, what is the point of going independent in the first place? The Nationalists argue, of course, that without the oil exports, and the Scottish GDP, the UK Balance of Payments would sky rocket. Another innocent, naïve thought.

The only way the Balance of Payments would alter is if Scotland used a different currency altogether. Alex Salmond would have to settle for Sterlingisation - pegging the Scottish pound to the UK pound, giving up all economic levers to control the economy. An embarrassing defeat would thus result in his resignation.

90% of the oil fields may lie in Scottish waters, but 100% of the Bank of England lies in London, so the Nationalists will, essentially, get what they are given in negotiations.

Salmond and his deputy, Nicola Sturgeon, argue that without a currency union, English businesses would be charged almost £500m a year in transaction costs when trading goods. But hold on one second- over 70% of Scottish trade is with the rest of the UK, and yet only 9% of UK trade is with Scotland. You do the maths. Who needs the currency union more? It would cost Scottish businesses five times the amount to trade with the UK.

Scotland will vote with their hearts and heads on the 18th. Let’s hope they make the right choice.

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