There is a lot of rhetoric about how Scotland will be better off under independence. What I haven’t seen up to now is much quantitative analysis.
I was at an event in the university of Edinburgh business school recently, and professor Brad MacKay presented some analysis he had done.
There were a couple of simple parameters to this:
- how long it takes to complete the process of separation (untangling healthcare, tax, welfare, pensions, legislature, etc). This will take time and cost money, use effort which could be spent on other things, and create uncertainty which will impact businesses. I think Brad’s calculations assumed it would effectively cost 20% GDP during that time. It certainly won’t be zero…
- how much Scotland grows after independence.
Brad showed a couple of different scenarios, and ran through the calculations of when they would pay for themselves.
The first scenario was optimistic. It only takes three years to untangle the two nations, and Scotland grows 50% faster after than before (3% pa instead of 2%).
In this scenario, it takes around 14 years to get back to where we are now (I.e. finish paying for separation), and 21 years to overtake where we would have been otherwise.
A slightly less optimistic scenario. We still outgrow the rest of the UK, but only at 2.5%, and it takes four years to untangle. I don’t remember when we get back to where we are now, but it takes nearer 50 years to catch up to where we would otherwise have been.
I haven’t seen much discussion about how much the process of independence will cost, or much measured debate on how much it is actually worth and how long it will take to pay off, so it was good to see some reasoned analysis. I don’t know how accurate the numbers are, but they sound plausible to me, if not downright optimistic – is it really believable that we will outgrow the rest of the UK consistently for decades?
I don’t know about you, but that seems a long time to me to wait for a payoff which is distinctly uncertain.
If you disagree with this analysis, give me some alternative numbers. It sounds measured and realistic to me.