The Economy
Smaller countries are more at risk in times of global economic meltdown; you just have to look at Ireland which in recent years has suffered a recession, higher taxes, lower public spending and higher interest rates. Scotland during such times won’t have the rest of the United Kingdom to help it out financially and to provide stability during times of a downturn. The global economy isn’t stable and Scotland won’t be able to protect itself from another credit crunch by relying on oil revenue alone which is a finite resource. All this could make it hard for the Scottish Government to raise money on international markets and it will affect the countries credit rating in a detrimental way.
Currency
It is clear despite what the Scottish Nationalists claim that there will be no currency union with Scotland after the vote for independence and if Scotland keep the pound it won’t be the same pound as we use in the rest of the United Kingdom. People and businesses will be forced to convert currency from one form of the pound to another. In the short term it is impossible to see Scotland adopt the Euro because of the fiscal uncertainty that independence will bring to the country, so Scotland will have to go it alone. This will all cause uncertainty and instability in the money markets that will last into the medium term.
Investment
Investment and money has already started to flood out of Scottish Businesses, even before the country has voted to become independent, if the country does vote for independence this will only get worse. Other counties will be reluctant to invest in the country in the future that has so many unanswered economic questions and that is not part of the European Union, since the risks will be just too high. This means the only investment of note will come from the Scottish Government itself and this will have to come through public spending which raises the question of where will they get the money from if it not through higher taxation because it will be hard to raise money on international money markets.
Interest rates
In an independent Scotland, what banks that are left will find it harder to borrow money in order to lend to customers, this will cause cash shortage that will result in them having to raise interest rates in order to attach the money they need. This will affect business and households by increasing there costs. Mortgages will be more expensive for home owners and businesses will have to pass the cost of borrowing onto consumers. This will have an affect on growth and in the short term could lead to a recession that would lead to higher unemployment, cuts in services and lower standards of living as has happened in Ireland since the credit crunch.
Business
It is impossible to think that business in Scotland will not be affected by independence and as we have seen some business have plans to move head offices from Scotland to the rest of the United Kingdom. Although currently Scottish businesses pay some of the lowest levels of commercial business rates in the United Kingdom but in an independent Scotland these would need to rise to pay for the promises made by the Scottish Nationalist Party. This would make Scotland a less favourable place to base a business, together with the uncertainties about an independent Scottish economy and the affects that independence could have on the important valuable Scottish export market.
Taxation
The Scottish Nationalist have made a lot of promises in the campaign for independence about how things will be better under their rule however the problem is going to be how they are going to pay for all these promises. The only way is through increased taxation and not just of the rich, who will flee the country, but by increasing the tax burden on every person in the country. Just looking through my thoughts you can see increased spending due to rising unemployment, increased public spending in order to invested, increased education funding and funding to the NHS, the list go on and on. There is no way that the increases in taxation can be avoided which will result in less consumer spending and less investment by business and will help fuel a recession which could last years.
Oil Revenue
A lot is being made of the importance of oil revenue but this is a infinite resource and the revenues generated by it will only be available in the short to medium term. Hanging too many promises off it will be a disaster just waiting to happen as this avenue of income comes to an end. Services funded by it will have to be cut drastically or taxation raised to make up for the short fall. Yes, oil is a golden egg an independent Scotland but has to remembered when it is used up there will be nothing to replace it. With uncertainty about the amount of oil reserves it is not clear how long the Scottish Government has before they run into trouble.
Health
Research seems to show that NHS spending in an independent Scotland would fall behind that in the rest of the United Kingdom unless the Scottish Government increases spending on health services. In order to do this they will need to find extra money through taxation. In addition to this the NHS is a United Kingdom based resource with some specialist treatments being offered in a limited number of Hospitals around Great Britain, some of these services would no longer be available after Scottish Independence representing a degrading of the services off to the people of Scotland.
Unemployment
With the financial companies already saying they will be leaving an Independent Scotland, employment in this sector is set to rock, then add to this the closing of the ship yards that are make ships for the Royal Navy and the loss of jobs in Naval bases and that just the tip of the iceberg. You can see there is no way increasing unemployment can avoid in an independent Scotland. The cost of increased unemployment will have to be paid for the Scottish Government which will increase the need for increases in taxation.
Food Prices
In an independent Scotland food prices will increase, partly due to the geography of the country and through the costs of having to import food from outside Scotland. Currently the major Supermarkets balance the cost of food distribution throughout the whole of the United Kingdom which benefits Scotland which is more spacey populated and where transportation costs are higher, once the country is independent all these costs increase and will passed on the consumer and will result in higher prices. In addition the need to exchange currency from one form to another will also add to price of food as will higher interest rates in Scotland and possible business tax rises.
Standards of Living
In a the short term there are going to be a sharp decrease in the standards of living in Scotland that the country will take tens of years to recover from. There will be a higher cost of borrowing, increasing unemployment, and higher taxation all of which will increase the risks creating a recession that will last years to a certainly. In addition to this lower investment, static wages, economic instability and a shrinking export market and oil reserves in the medium term which will lead to tight fiscal control and lower public spending and cuts in services. For the majority of the people of Scotland they will be worse off in years to come than people within the United Kingdom.
Education
Free University Education could be at risk in Scotland once the fee paying students from the rest of the UK stop going to Scottish Universities. This could in three years time result in a short fall of £100 million University in fees being received by the Universities which the Scottish government will have to make up. This will make it impossible for Nicola Sturgeon to keep her promise of free universities without increases in taxation. In the medium term the Scottish people could find themselves having to look to make savings in other areas of Education due to excessive short term spending just after independence.
Migration
In countries with falling or low standards of living people leaving the country has always been a problem. You just have to look at Ireland to realise that generations of young people have left the country to seek a better standard of living for their children. This has left Ireland with the problem of an aging population with all the cost that this involves on those that remain in the country. It is highly lightly that the same situation could arise in Scotland if there were a free movement of the work force across boarder as there has been between Ireland and the United Kingdom. This could be a disaster for the Scottish economy.
Population and Emigration
Even the Scottish Nationalist acknowledge that Scotland will need to grow it’s population and will need a net inflow of people of other counties for some time to come this will result in polices that encourage emigration to Scotland. This is going to be a massive problem in a country with falling standards of living and an unstable and adjusting economy which will be less and less attractive as time goes on. Also the numbers of people that the country needs will be much higher than predicted due migration form Scotland to more wealthy counties.
Europe
It is naturally assumed by the Scottish Nationalists that Scotland will be instantly a member of the European Union however the EU has already said it will need to apply for membership. From what I have heard from people in business in Scotland that trade and deal with the EU it isn’t going to be simple to get membership and other member states are not happy with the political system in Scotland or their push for independence. They see the country as being economically unsound and fear that the cost of them joining could be to high a price to pay in terms of propping up the economy given the spending plans of the Scottish Nationalist party.
Boarder Control
Boarder Control and Customs are inevitable and will be implemented on both sides of the boarder. Scotland will not want low cost items coming into the country from the United Kingdom which could undermine is tax system and so will need to set up customs posts. The United Kingdom on the other hand won’t want large number of emigrants and Scottish nationals flooding into the country through an open boarder with Scotland and will set up boarder controls. Board controls also will be required to be put in place to meet policing and defence needs as deter smuggling of goods.
Defence
The Army, Navy and the Air Force in Scotland after independence will be tiny compared to the forces at its disposal that it has today and it is unclear if the Scottish Government are willing to spend enough money to allow the country to join NATO. Although it is clear the forces will be enough to defend it will have a limited influence militarily around the globe. One thing nobody has touched on in these times of international terrorism is that Scotland will need its own secret service and intelligence organisations. In addition to this Scotland will be reliant on the import of military hardware from around the world as defence contractors move operations to the United Kingdom from Scotland.
Policing
Although not a big issue, Policing has to be one to be considered and there will be an effect both sides of the border. First one will have a new problem of cross border crime, i.e crimes being committed in one country being committed another. Police won’t simply be allowed to cross the board as this would be an invasion of sovereignty so a whole set extradition rules would be need to be put in place. In addition to this services which are currently provided by national bodies to the polices forces in the United Kingdom wouldn’t be available to the Scottish Police after independence such as those to fight cybercrime. These will have to be set up in Scotland adding to the cost of policing the nation.
Broadcasting
It is clear that the BBC will no longer broadcast radio and television programmes in Scotland after independence and these will not even be available on BBC iPlayer. The BBC role in Freeview in Scotland will be a thing of the past as terrestrial broadcasts come to an end, although satellite broadcasts will still be available for the foreseeable future. Given the small take in license fee it is not clear if the replacement Scottish version of the BBC will even be able to afford to buy in all the programmes wants from the BBC. Further to this their will be no need for the BBC to produce programmes in Scotland that have no appeal or relevance to audiences within the United Kingdom. The BBC will simply leave Scotland.
Telecommunications
Telecommunications companies have already highlighted that the cost of using mobile devices will rise just to pay for maintaining and expanding the mobile data networks in Scotland come independence. What is not said that it will cost more to phone relatives in the United Kingdom after independence because they be making international calls. In addition to this the cost of maintaining the fixed lines services is greater to in a country such as Scotland. It is also unclear how the telecommunication systems in an independent Scotland will be regulated. These are all things that little thought has been given too.
Politics
It is unclear other than that Scottish National Party will be in power for at least three more terms if independence becomes reality in Scotland on Thursday. There is no organised opposition in Scotland to oppose them and they will be on the high of the independence vote. Over time the current unionist’s parties will come together in some way and provide some opposition to the nationalist party. And if they can ever defeat it is a question that remains to be answered, but something that will something is a long way off. Some people in Scotland will feel completely marginalised for years to come and this could be major problem for the Scottish Government and undoubtedly will lead to civil unrest.
World Influence
With a small high cost economy, a small population and a small sized military presence Scotland will have little say in world affairs. It will become a nobody state in a big world. On the world stage it will become a bit player and have little control on world events. Its influence will be tiny and this will affect trade and commerce for years to come. In addition to this, being a socialist country in a capitalist world will further diminish it credibility with a lot of nations which have a distrust of such political systems.
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