Indy: Economic Concerns Found By Survey

7 June 2014, 06:29

Scotland's economy would be worse off under independence according to an overwhelming majority of leading economists, a survey has found.

Weaker tax revenues, higher borrowing costs, significant transition costs and prolonged uncertainty over Scotland's place in the European Union (EU) were among the issues raised by 46 experts surveyed by the Centre for Macroeconomics (CFM).

Only one economist thinks Scotland would be better-off out of the experts surveyed from Deutsche Bank, Birkbeck, University College London, London Business School, the London School of Economics, Royal Holloway and the universities of York, Oxford, Kent, Warwick and Heriot-Watt in Edinburgh.

Experts were divided over the economic sense of the UK refusing a currency union with an independent Scotland, with three-fifths casting doubt over how robust such an arrangement would be but others regarding it as a viable option that is being dismissed as a campaign tactic.

Three-quarters of the respondents said that they either disagree or strongly disagree with the notion that Scotland would be better-off in economic terms as an independent country, out of the 28 respondents who replied to the question.

Some 95% of respondents disagreed that Scotland would be better off, excluding the six respondents who say they neither agree nor disagree.

George Buckley, of Deutsche Bank, said an independent Scotland would be exposed to weaker tax revenues from depleting oil resources and a worse demographic profile than in the rest of the UK.

John Driffill, from Birkbeck, said an independent Scotland could set its own policies to suit preferences in Scotland, but may lose out because some things that are done better jointly by Scotland and the rest of the UK will become more difficult to co-ordinate.

Michael McMahon, of Warwick University, said that there would be "significant transition costs''.

Michael Wickens, of York University, and Martin Ellison, from Oxford University, said Scotland might pay higher borrowing costs than the UK while Mr Ellison said the recent euro crisis "shows how challenging a monetary union is without a fiscal, political and banking union''.

But Andrew Mountford, of Royal Holloway, said a currency union "should be possible'' while Mr Driffill said that the UK's stance "is purely motivated to influence the referendum''.

CFM is a research centre funded by the Economic and Social Research Council and includes the University of Cambridge, the London School of Economics (LSE), University College London (UCL) and the National Institute of Economic and Social Research (NIESR).

This is its first survey of independent professional economists specifically to address economic issues in the Scottish independence debate.