The White Paper makes no mention of any borrowing powers for an independent Scotland, however the biggest economic problem with independence is thought to be uncertainty.  Past referenda in Quebec are often used as an example by those on both sides of the independence debate.  Quebec undertook a referendum on independence in 1995.  There was no discernable affect on the economy until about two weeks before when polling started to indicate that there might be a yes vote.  These polling results were proceeded by a fall in the value of the Canadian dollar and stock market as well as individuals moving their bank accounts out of Quebec.

However Quebec was in a different economic position in 1995 to that which Scotland occupies now.  Quebec had one fifth of the Canadian economy and a quarter of the population, so it does not necessarily follow that what happened economically in 1995 in Canada is necessarily going to apply to contemporary Scotland.  Many feel it would be reasonable to assume that the uncertainty could affect the value of Scottish companies.

The SNP hopes for the future of the Scottish economy are set out in the White Paper as:

• Devolution of taxation and spending responsibilities as a whole "fiscal autonomy" allowing the Scottish Government to design a business tax environment to encourage investment
• There could be differing levels of fiscal autonomy, with full fiscal autonomy involving complete responsibility of every form of taxation within Scotland and enabling the Government to tailor taxation regimes and become fully accountable to the public
• Devolving powers to do with company formation, regulation and insolvency would allow the Scottish Parliament and Government to respond to Scottish concerns
• Devolving competition law means that Scotland could better reflect market needs and conditions
• Scotland would have the ability to influence at EU level the financial services sector
• Scotland could assume responsibility for oil and gas most likely along the Norwegian model of investing profits in a trust fund for the nation
• It is a necessity that the UK has one currency.  Scotland's joining the Euro would be dependent on a decision across the whole of the UK.

Many feel that any separation from the UK Government would need to be a "velvet" divorce so as not to harm Scottish tourism, or prejudice customers of Scottish companies south of the border.  European experts feel that the White Paper poorly informs the economic debate, and that much more data would be needed before any conclusions could be drawn.

Mairi Sharratt
mairi.sharratt@shepwedd.co.uk

18 September 2007

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