SCOTLAND could end up as "one of Europe's vulnerable, marginal economies" if it chooses independence, The Economist concludes today.
In its latest edition, entitled "It'll cost you," the respected magazine says independence would come at a high price for Scots.
It contends the Nationalist argument that Scotland, largely through North Sea oil and gas, subsidises the UK and the Unionist argument that brands Scotland a subsidy junkie are both wrong in the short term.
"Assuming it keeps the oil and gas extracted from under Scottish waters, an independent Scotland would currently gain roughly as much in taxes as it would lose in subsidies," the magazine explains.
However, in the longer term it says the future would be much dicier if Scotland chose independence.
An independent Scotland would be a "small vulnerable barque" on a stormy economic ocean. It would depend on oil for 18% of its wealth yet North Sea production has been falling 6% a year for the past decade and the oil will, eventually, run out.
The Economist suggests an independent Scotland would also be vulnerable to other shocks, pointing to the banking crisis and noting how, at its peak, the Royal Bank of Scotland had a balance sheet 13 times the size of the Scottish gross domestic product.
By dint of its size, an independent Scotland's borrowing costs would almost certainly be higher while its bond market would be "small and illiquid". The magazine, however, notes how an independent Scotland's biggest problem could be its currency. Sticking with sterling and entering a monetary union without fiscal union was a set-up that had proved disastrous in Europe, it claims.
The Economist concludes: "If Scots really want independence for political or cultural reasons, they should go for it. National pride is impossible to price. But if they vote for independence, they should do so in the knowledge that their country could end up as one of Europe's vulnerable, marginal economies."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article