19.11.12
‘Fiscal challenges’ for independent Scotland
Scotland could face long-term financial difficulty if the country votes for independence from the UK, a new report suggests.
The independent think tank the Institute for Fiscal Studies (IFS) studied some of the fiscal choices that Scotland might face should it choose independence in the 2014 referendum.
In the short term, an independent Scotland would not face dissimilar problems to those facing the UK as a whole, presuming that Scotland took its “geographical share” of North Sea oil and gas revenues.
However, if North Sea oil and gas revenues fall as predicted, an independent Scotland would face greater problems than the UK in the longer term. Oil and gas revenues are very volatile, representing 20% of Scottish revenue in 2008-09 but just 12% in 2009-10.
The report stated that a new Scottish Government would need to put together a fiscal plan that would set out a long term path to sustainability.
David Phillips, one of the authors of the report said: “Independence would provide Scotland with an opportunity to set its own fiscal course. In common with all countries it would face constraints and would have to make, sometimes uncomfortable, choices.
“In the short run its higher public spending than the UK average could be covered by oil and gas revenues if these are assigned on a geographic basis. In the longer run the loss of these revenues would lead to tougher choices than those faced by the UK as a whole.”
For the full study, visit: www.ifs.org.uk/bns/bn709thw(00)zzx.pdf
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