I LISTENED to our First Minister on BBC radio last week being questioned on economic matters. It was not a good interview.
When asked whether she accepted arrangements between the rest of the UK and a separate Scotland would have to be agreed rather than decided by just her she pounced on and ridiculed what she regarded as the easy meat of the interviewer’s example – free movement of people – rather than admit that what he said was true. Actually even the interviewer’s example should have brought a different response – the freedom for citizens of a separate Scotland to live and work in England with complete ease as they do now would not be guaranteed. The central point that Nicola won’t be able to decide on her own was avoided.
When asked about the disruption to Scottish companies arising from the hard border between Scotland and England which must happen if Scotland leaves the UK and joins the European Union, we got utter waffle about how both England and Scotland would suffer from friction at the border and the EU market was much bigger than the UK market anyway – the clear impression being given that the swap would be a net gain for Scotland.
This position is ludicrous. If you cut your finger off, it is bad news for you but it is much worse news for your finger. If companies in Devon cannot sell easily to customers in Scotland it will be annoying for them but if a supplier in Lanarkshire becomes a bureaucratic nightmare to deal with for customers in England it is likely to spell disaster for that company, its employees and the wealth it creates. It is not a symmetrical risk – Scotland would suffer much more than England.
That the EU market is bigger than the UK market is not a surprise revelation – it is a fact but an entirely misleading one. What matters to Scotland is the actual size of its trade with the rest of the UK, which is many times that of its trade with the EU. It is rank dishonesty to pretend that Scotland gaining easier access to the EU market but making it more difficult for our companies to deal with the rest of the UK is a good deal – it is a very bad deal.
The most revealing point was when Nicola was asked whether she accepted that without its own currency and central bank a separate Scotland could not have engaged in quantitative easing – a policy which has supported your job as well as the value of your house and pension.
The answer was confused nonsense about putting in place a central bank, Scotland is a wealthy country blah, blah. Complete avoidance of the correctness of the statement she was asked to confirm.
The whole interview left me wondering whether our First Minister was indulging in the usual politician’s economy with the truth or, more worryingly, was entirely clueless on these issues . Scotland would be an economically viable separate country – it’s perfectly possible. Possible but immensely stupid.
It is a fact that Scotland spends more on public services than is raised in taxation here. If we left the UK our public services would have to be cut or taxes raised – we could not borrow more if we want to join the EU.
It is a fact that access to banking – the finance your business needs, mortgage for your house – would be more fragile and very probably more expensive.
It is a fact that a real border with England would significantly harm the Scottish economy. It is a fact that if you are a public sector employee your pension would be less safe if it is backed only by Scotland’s economy rather than by that of the whole UK. It is a fact that the endless focus of the Scottish Government on the constitution has stopped it tackling effectively the issues which really matter.
Let’s hope the new Parliament brings more honesty and attention to things like the health service and education. Fingers crossed.
Guy Stenhouse is a Scottish financial sector veteran who wrote formerly as Pinstripe
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