Economic Case for an Independent Scotland - IFS Report

[Who Knows]

http://www.ifs.org.uk/comms/r88.pdf

 

The institute of fiscal studies (IFS) today published a paper based upon the UK Government Quango the office of budgetary responsibility (OBR) forecast over the next 50 years for Scotland and the UK.

 

Any report is unlikely to be accurate over that time period as life is full of uncertainties and the technological advances over the next 50 years are not likely to be reflected in the report.

 

However although the report is being highlighted as being a blow to the cause of the independence campaign it also shows based upon the OBR forecast both Scotland and the UK will be in permenant deficit for the next 50 years. Austerity is the future both ways assuming no change in policy directions

 

However OBR has historically underestimated the price of a barrel of crude oil and amount of oil still to be removed from the North Sea. In 2010 it forecasts today price would be $86 a barrel and it is currently trading at $108.55

 

The OBR figures do not include the potential £200 billion addition revenue over the next 20 years that Sir Ian Woods highlights in a report for the UK Government or the impact of the Kraken field that will shortly be developed of Shetland. With just these two changes the whole analysis and assumptions would change.

 

Oil predictions will always be subjective but an alternative view to the impact on oil can be read at http://wingsoverscotland.com/the-oil-debate-for-busy-people/

 

Untangling UK current income and expenditure from current information is never accurate but two facts are clear that Scotland receives/allocated more expenditure than the UK average and also generates more taxes than the UK average. The same is also true for London.

[MuckleJoannie]

The trouble with extrapolating from known facts is that they don't take into account things that will only appear over the horizon after you do the analysis. Who would have guessed twenty years ago that the SIC would be in financial crisis and Sullom Voe would have a second construction boom. When the SIC started on the cutbacks there was widespread doom and gloom that Shetland was finished.

[shetlandpeat]

The Chinese have very long term plans for their future, because they have them, they can be better positioned to ride any shortages out. With the 4-5 year plans here, we pay each time a new admin gets in.

[brian.smith]

Both reports rely on some sort of mythical powers fact is Scotland will be no worse off out of the UK and will be exactly the same within it the only factor that changes that is what proportion of the national debt Scotland inherit and how they plan to service it.

[Scorrie]

Explain this 'fact' that Scotland will be 'no worse off out of the UK' and be 'exactly the same within it', please.

[brian.smith]

Simple whatever way the country jumps we will have debt it will be the debt that criples any chance of change whether we are independent or remain part of the UK

[Who Knows]

Analysis of the IFS paper has been made in several places and raised serious concerns over the analysis.

 

The IFS report for example assumes oil is $98 a barrel in 2020 but alternatively the independent Organisation for Economic Co-operation and Development (OECD), based in Paris, forecast oil will be $190. A significant difference with significant impact upon the out-turn forecasts. Further additional concerns with the fundamentals of the report are raised on the following two reviews

 

http://www.businessforscotland.co.uk/ifs-is-out-of-touch-with-the-reality-of-an-independent-scotland/

 

http://wingsoverscotland.com/stacking-the-deck/

 

Statistics and economics will always be open to interpretation.

 

Therefore it will come down to the level of confidence you have that change will be for the better.

 

If the IFS forecast for the UK with no change to the government's austerity agenda for the next 50 years then is the reality we really want to face?

[brian.smith]

As I said we have no choice either way as Westminster cannot let us walk away without taking our supposed share of the debt the two links you have put up are pro independence and the IFS are better together

Edited November 20, 2013 by trout

[Gorgonzola Butt-cheese]

http://www.rigzone.com/news/oil_gas/a/130225/Scotland_Exported_48B_of_Oil_Gas_in_2012

 

 

I am going to vote yes to independence rather than vote for a continuation of the status quo.

 

But I know it wont really be independence whilst we still have the Brussels parasites on our back.

 

Hopefully the EU will implode , with 50% youth unemployment across many regions there is a good chance.

[Who Knows]

It would be a rare occurrence to find a paper published on the Scottish economy and potential changes that independence can bring that does not have a leaning towards one side of the argument.

 

However as the Economy in some people's mind will be the determining factor in which they vote then presenting links to both sides of the argument for people to read and digest what makes sense to them is an important factor to allow people to make a more informed decision and aware of the issues.

 

There is a lot of uncertainty involved as even the current level of funding under the Barnett formulae is not guaranteed to maintain the current level of funding.

 

The level of Debt may be a factor that influences people's decision. It is unlikely that there will be a repeat of the Republic of Ireland deal were all the debt remained with UK as the continuing Sovereign state. This was also the scenario when Russia took on the debt of the former USSR along with the nuclear weapons.

 

However using the current way UK Government allocates the debt repayments as an indicative example then the level of debt as a percentage of the countries GDP is lower in Scotland than it was for the UK. The OBR forecast is that inherited debt would be 86% for Scotland and 102% for the remaining elements of the UK. The OBR forecasts as highlighted earlier are not necessary reliable and as potentially understates the value of North Sea Oil will potentially understate the value of Scotland GDP. The perceived good governance is that debt should be around 40% so both well adrift.

 

The last year statistics are currently published for the gap in funding was running at 5% for Scotland and 10% for the remaining parts of the UK.

 

Solving the debt question in part is down to believing who is going to make a better job of tackling this.

 

However the vote in 2014 is not about electing a Government.

 

If the votes no then 2015 General Election were that issue will be debated whilst with a Yes vote 2016 has been outlined as the date for the first elections.

[RickB]

Wow. what happened?

well reasoned, fact based arguments on shetlink! never thought I would see the day!

 

Seriously though,

No one can predict what level of taxation we will have in ten years wether or not scotland leaves the UK.

Personaly I will vote yes next year and Im getting fed up of the scare stories that the Better Together folk keep giving us. This is one of the reasons that I no longer watch BBC News.

I admit it will be a gamble to become independant (as I'm sure every similar country has faced on gaining independance) as we cant predict the future.

I cant remember what the national debt is at the moment, but Scotlands share (I think) would be around 9% (based on Population).

[Gorgonzola Butt-cheese]

 Correction Rick B !

 

It's not independence  -  Brussels - Westminster - Holyrood.

 

Just getting rid of the messengers in the middle , divide and rule ?

[brian.smith]

If Ricks calculation on our 9% share of debt then independance looks more attractive

[shetlandpeat]

The article mentions the need for strict fiscal rules within the "new" monatary system to give creditors the confidence to loan the 9% debt. The new Gov will also need to borrow to continue to get new North sea developments moving.

[MuckleJoannie]

Mark 24 March, 2016 in your diaries!

 

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-25070576