The UK government is like Keyser Soze
The greatest trick the UK government played was persuading the Scottish government that the economic power lay in Holyrood. Well done, Jim Fairley. On BBC's Debate Night (a production I have never had the 'pleasure' of watching in full), the MSP for Perthshire South and Kinross-shire stuck his head above the parapet: we are in the constitutional position where the big decisions that we want to make in this country are curtained on the basis of the decisions elsewhere The elsewhere is London. Jim was responding to a question about growth. In essence, he said that the Scottish government [...]
Scottish Government’s Chief Economist speaks to Scotonomics
In a revealing interview, William sat down with Gary Gillespie, the Scottish Government's Chief Economist. They dissected the intricacies and challenges of Scotland's economy, especially in the context of its quest for independence and fiscal autonomy. Their conversation, sprawling over various economic tenets—from government spending and taxation to the creation of money and the implications of a new currency—offered deep insights into the operational dynamics and strategic considerations of Scotland's economy. William: "Let's start with a basic yet pivotal question: do taxes pay for government spending at the UK level, and how does this relationship differ at the Scottish government [...]
Scotonomics Post Indy Economy Quiz
In January, we created a very short quiz on Scotland's post-indy economy according to the conditions set by the current Scottish government. You can complete the quiz here. It was important for us to be as factually correct as possible when outlining the Scottish government's post-independence approach. This is a challenge when the underlying neoclassical assumptions of the Scottish government are very different from the real-world assumptions we hold. We used Building a New Scotland: A Stronger Economy with Independence as this is the most recent and detailed outline of their position. The quiz covers what the Scottish government calls [...]
Scotland’s Government Bonds
Scotland's government bonds are the least-worst way to raise much-needed finance for a Scottish government unable to abandon a neoliberal straitjacket. By 2026, Scotland will have a Government Bond available to investors. It will borrow up to £3 billion, with an annual limit of around £500 million. For context, Scottish GDP is likely to be around £230 billion by the end of the parliamentary term. So, up to £500 million per year is a small amount to borrow. Some would argue that it is too small to be insignificant, but we don't agree. £500 million buys you a lot of [...]
The economic vision for Scottish independence
Stability. This is the economic vision for Scottish independence emanating from the current SNP administration. Is this the rallying call for a movement that wants a different type of economy? During our Festival of Economics in March 2023, we interviewed SNP MP Stewart Hosie, who was, at the time, shadow spokesperson for the economy at Westminster. It was a fascinating conversation. Stewart highlighted the importance of 'economic stability' and 'fiscal responsibility' as Scotland migrates to an independent economy. Reporting on the conversation, The National wrote: Stewart Hosie, the party’s economic spokesperson, said he wanted to sound like a “boring banker” [...]
Currency in an independent Scotland
Scotland's decision on which currency to use post-independence is the most important decision we will make. This, more than any other economic decision, will shape our economic future. We put a case for a Scottish currency on day one of independence by listing some of the fundamental differences that affect a country as a user of a currency and a currency issuer. After a yes vote for Scottish independence, everyone agrees that initially, during the transition period, we will continue to use Sterling as our currency. But what happens next? What will be the currency in an independent Scotland? An [...]
Scotland in the EU the economic case has yet to be made
One of the major decisions affecting Scotland post-independence is whether or not it should join/re-join the European Union. The economic case has not been proved, it has not even been discussed. There is no doubt that Brexit had a huge and unnecessary negative impact on the Scottish economy. But this does not mean that being part of the EU is the solution. The economic case for European membership still has to be made. The case for Scotland as part of a single market is much stronger. The main economic difference between being part of the single market and the EU [...]
An actual analysis of Professor MacDonald’s recent analysis
It is amazing what passes as "analysis" these days. If you are a Professor and stick up a website, you can announce a few hundred words as "analysis". If you criticise the SNP, the Scottish Government or the idea of independence, you are nailed on to get a chunk of mainstream media coverage in Scotland and the UK. Enter the 644-word analysis from Professor MacDonald on his new ourmoney.scot website. The headline figure is that: the average Scottish household faces 20% hit to income because of a 30% drop in the value of the currency. The actual drop is a [...]
The Scottish Government no authority all the responsibility for growth
Why does the Scottish Government seek responsibility when it doesn’t have the authority? The Scottish Government released Scotland’s National Strategy for Economic Transformation earlier this year (1). On page four, Scotland’s Finance Minster outlines how Scotland's economic transformation would take place during a “decisive decade”. Kate Forbes could not have put it any more succinctly. The next ten years may well define the whole century for Scotland's economy and society. We considered some of the plus points in the National Strategy for Economic Transformation in detail in another post. In summary, the growth-focused strategy targets a Scottish economy that “significantly [...]
The pound sterling is not Scotland’s currency
There is a world of difference between using something and owning it. The pound sterling is used in Scotland. But it is owned by the UK Government. The pound sterling is not Scotland's currency, it is the currency used in Scotland. The only way an independent Scotland could continue to use the pound sterling as its currency is if the UK Government agreed. This post is short and tries to explain the simple fact that the UK government oversees the Bank of England which is the exclusive issuer of the pound (other entities can issue pounds under licence from the [...]