AN INDEPENDENT Scotland could become a “Greece without the sun,” a think tank warns today.
In a new report, the right-of-centre Centre for Policy Studies concludes Scotland leaving the UK “would entail significant economic risk”.
Its comparison with bankrupt Greece was seized upon by the Scottish Conservatives but dismissed by the SNP, which said leaving the EU presented the biggest risk to Scotland’s economic prospects.
The report follows Nicola Sturgeon’s repeated warnings that a second independence referendum is “highly likely” in the wake of Brexit.
The First Minister has embarked on a diplomatic charm offensive in an effort to preserve Scotland’s EU membership. However, a number of European leaders have cast doubt on the country’s chances of being treated differently from the rest of the UK.
READ MORE: Nicola Sturgeon not seeking 'green light' for another independence referendum in emergency debate
The Centre for Policy Studies, which was founded by Margaret Thatcher, looked at the country’s prospects in a report entitled ‘Scotland: Could it become Greece without the sun?’ It said: “Nicola Sturgeon’s push for independence does have some logic from a democratic standpoint.
“Scotland is being taken out of the European Union despite voting to remain within the institution.
“However, the economic backdrop to Sturgeon’s push for independence is not encouraging for her.”
It said Scotland’s budget deficit, the difference between public spending and the amount of tax raised in the country, is proportionately three times worse than the UK’s as a whole.
It also highlights “plunging” North Sea revenues, slashed from original forecasts of up to £7.9 billion this year to as little as £500 million.
READ MORE: Nicola Sturgeon holds Brussels talks to set out Scotland's EU position
The report adds: “Two-thirds of Scotland’s exports go to the rest of the UK but just 15 per cent go to other EU countries, further questioning the economic rationale behind Scottish independence.
“Euro membership would expose Scotland to the risk of more asymmetric economic shocks and the European Central Bank would be less capable of responding to shocks compared to the Bank of England.”
“Why, therefore, would you break ties with the UK for the purpose of restoring ties with the rest of the EU via European Union membership?”
The report says adopting the euro single currency, a move cautiously supported by some Nationalists, would “present huge risks for a newly-independent Scotland”.
It concludes: “There is a precedent for a small, romantic country, surrounded by hundreds of islands, perched on the extremity of Europe, seeking membership of the euro: Greece.
“Of course, it would be inpertinent to suggest that Scotland’s circumstances are directly equivalent to those of Greece, but it does undoubtedly serve as a useful reminder that countries with challenging public finances can end up suffering inside the euro.
“This will undoubtedly be on the minds of the Scottish electorate should there be a second independence referendum.”
Scottish Conservative shadow economy secretary Dean Lockhart said: “Although departure from the EU may cause some difficulties, those difficulties won’t be addressed by leaving the UK too.
“We must remember that the UK economy is four times more valuable to Scotland than the EU’s.
“Calling another knee-jerk independence referendum would make the uncertainty even greater.”
He added: “The SNP was repeatedly told about the financial risks of separation in the run-up to the 2014 vote.
“The party ignored them then, and has shown no signs of heeding them this time either.”
An SNP spokesman said: “This is unforgivable hypocrisy, coming from a right-wing Tory think tank founded by Margaret Thatcher and backed by Brexiteers who have taken the UK economy to the edge of a cliff. Even the authors of this report admit that the bogus economic comparisons they seek to draw with Scotland are ‘impertinent’ – and the reality is that Scotland is the wealthiest part of the UK per head outside London and south-east England.”
“The biggest risk to Scotland’s economic stability and security - without any question - is the threat to take us out of the EU and a single market of almost 500 million people.”
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