The last blog post of the year is also Arc of Prosperity’s first ever video podcast:
I had a feeling of déjà vu today. I was reading the NIESR’s blog post about the Scottish national debt:
The first option is where an independent Scotland pays the full amount of its share of UK debt at independence, which we call a ‘clean break’ option. Of course, one would need to take the maturity of the debt into account; after all, owing £100 in 10 years time is less burdensome than owing it today. A simple back of the envelope calculation, taking the duration of UK public debt at 8.5 and the 4.1% as the discount factor (the average yield on 10 year UK gilts since 2000) reduces the population share of gross debt from £153bn to £109bn.
I had a strong feeling that I had seen the £109bn figure mentioned in another context, and a bit of googling showed I was right — Business for Scotland recently came up with exactly the same figure for the an independent Scotland’s assets:
An independent Scotland will inherit a fair share of the UK’s £1.3 trillion assets. This is of huge significance. These assets will generate a huge economic windfall for the people of Scotland of £109 billion.
Of course there are many ways to calculate Scotland’s share of the UK’s debts and assets (both the blog posts mentioned above provide many useful details), but it’s still a rather interesting coincidence to find the same figure in both places.
If Scotland can resume its existence as an independent country with hardly any national debt, it will make life much easier, even if buying a navy, fifty embassies and the Scottish share of the Royal Mail will require us to borrow a few billions.
Most countries have some national debt, but the UK has accumulated far too much for its own good, so it will be a huge advantage for an independent Scotland to start out with a clean sheet.
Before I moved to Scotland in 2002, one of my main political interests was the European Union, and I went on a number of study tours to Brussels to visit the European Parliament and talk to politicians there.
(After moving to Scotland, I’ve gradually become less interested in the EU. I guess this is because EU politics is handled by Westminster, which means that it doesn’t feature very prominently on the Scottish political arena. I would like to think this area will be one of the unexpected consequences/benefits of independence, because the EU discussions will suddenly be taking place in Holyrood instead.)
One of the questions I spent many hours discussing back then was the absence of a European demos and how to create one. What this meant was that we could see that most Europeans were primarily concerned with the politics of the countries they lived in, and they discussed European politics in that framework. Even in areas where the EU is much more powerful than the member states (such as international trade negotiations, or fishing quotas), there never is a single European debate but instead there are separate debates in each country. A European demos would involve the creation of a place where people from everywhere in the EU could discuss political questions with each other instead of having to go through a national layer.
Nothing much ever came of our discussions. Even today, when it’s so easy to create a pan-European website, almost nobody accesses those sites instead of national media and blogs.
However, when I look at the Scottish independence debates in Scotland and in London-based media, I can’t help thinking back to some of the old demos discussions.
Is there a such a thing as a British demos today? Of course it’s possible to live in Scotland and get your news primarily from the BBC and the Guardian, for instance, but at least amongst the independence campaigners it seems to be the rule to get your news mainly from Scottish blogs, newspapers and TV programmes, whereas the UK-wide ones are mainly ignored (except as examples of scaremongering).
Are we seeing the separation of the Scottish demos from the UK demos, or has the latter never existed?
When we bemoaned the lack of a European demos, our main concern was that it was hard to make the EU fully democratic without one.
In the same way, if the Scottish demos is now separate from the rUK one (and it’s hard to argue it isn’t when you look at the massive ignorance of the Scottish independence debate you see in London-based media), a UK-wide democracy becomes almost impossible, and Scottish independence is the obvious solution to rectify the problem.
Danish politicians are well aware that they cannot raise taxes on food and drink without looking at the taxation levels in Germany and Sweden. As soon as you can save enough money to pay the petrol needed for the trip by shopping abroad, people start doing it.
When I was a kid, almost everybody in the village where I lived (100 miles from the German border) bought beer, wine, spirit, sugar, chocolate and a few other necessities in Flensburg. Over the years, the exact products have varied depending on the price differentials, but there’s always been something worth buying.
Obviously, the supermarkets know they’re losing trade to their German counterparts, but because the largest Danish cities are a bit too far from Germany to make the shopping trip worthwhile for people living there, Denmark is in general managing to keep prices higher than in Germany.
However, the distance from Glasgow (and the rest of the Central Belt) to Carlisle is about 100 miles, too — in other words, the vast majority of Scots live close enough to England that it’s worthwhile to drive down south to buy food and drink if the price differential is big enough.
What this means is that Scottish supermarkets will never be able sell anything at a price that is drastically higher than in England, even if it means their profit margins are reduced, simply because the alternative is not to sell very much at all (which is even worse for profits).
Morrison yesterday said this: “Our view is that if an independent Scotland increased or decreased regulation or taxes we’d have to take a second look at our pricing. Clearly that could work for or against Scottish customers depending on the direction of travel.” That sounds quite reasonable. I expect some products will be cheaper in Scotland, while others will be dearer.
What my experience from the Danish-German border tells me is that the overall price level cannot be much higher in Scotland than in England, because so many Scots live very close to the border. On the other hand, prices could theoretically be higher in the rUK than in Scotland, because only a small proportion of the population live close enough to the Scottish border to take advantage of cross-border trade.
To conclude, there’s reason to be optimistic. In an independent Scotland, politicians and supermarkets will have a joint interest in keeping prices down so that money flows in rather than out as a result of cross-border trade.
Until very recently, journalists and politicians in the rUK were dismissing Scottish independence as something that clearly would never happen, so no planning was necessary.
Things are starting to change, however. Two of today’s news stories were examples that people south of the border are starting to wake up to the fact that Scotland might vote Yes next year.
The first story was a BBC article about choosing a flag for the rUK. Some of the proposals are rather ludicrous, but I found their reasoning for potentially retaining the Union Jack rather interesting:
Now, the prospect of Scotland leaving the United Kingdom throws open the question again. It’s already been suggested by the College of Arms that with the Queen still head of state of an independent Scotland there would be no need for a redesign. But there is still the possibility of renewed debate.
Andrew Rosindell, who chairs the All Party Parliamentary Group on Flags and Heraldry, agrees that the matter is unclear. “There is no official legal protocol on flags, to the extent that you can’t even say that the union jack is the flag of the United Kingdom.”
“It was created at the time of the union of the crowns,” he says – as opposed to full political union, which did not happen for another 100 years. Since the movement for Scottish independence proposes to retain the British monarchy, redefining the flag in the event of a Yes vote would not make sense, says Rosindell.
It sounds a bit strange. Are they saying they can only use the Union Jack so long as Scotland remains a monarchy? Surely they’d want a flag they could use no matter what Scotland decides to do in the future? Anyway, that’s their problem. If they want the Union Jack, they can keep it.
The second news story was about the threat to Britain as a global brand if Scotland leaves.
Scottish newspapers (such as The Herald) decided to portray it as yet another bit of scaremongering, claiming it’d be bad for Scotland, too.
However, if you read the actual report (PDF), it’s clear their worry is that they have for a long time been selling England as Britain, so if the rUK starts calling itself something else, a lot of expensive branding will have been wasted. The following two sentences are rather revealing: “VisitEngland is responsible for growing the value of domestic tourism and is a key organisation in the GREAT [Britain] campaign. Funded by the Department for Culture, Media & Sport, it works in partnership with the tourist industry in England (Wales and Scotland have separate groups) to deliver inspirational marketing campaigns and to provide advocacy.”
Also, as Interbrand (another global branding company) points out (PDF), Scotland already has a very strong brand:
Ireland and Scotland are widely acknowledged as having created country brands that punch far above their natural weight. Part of the reason for this is that they are in the so-called ‘tiger club’, small, cocky fighters who use the illusion of an enduring enemy to create a strong brand identity for themselves as the underdog.
In the case of Scotland for instance they even used an advertising line called ‘Scotland the Brand’ (replacing Scotland the brave), also, the Scottish Culture Board has sent Hollywood a training course in Scottish dialect to make sure that authentic accents are the only ones we hear on the big screen (the end of ‘Scottie’ from Star Trek perhaps).
It’s therefore clear they’re worried about themselves, not about Scotland.
It appears the rUK are currently working their way through the well-known five stages of grief (denial — anger — bargaining — depression — acceptance). I would say they’re currently progressing from denial to anger (“You can’t take our flag! You can’t ruin our brand!”). It’s good to see they’re slowly getting to terms with it.
Of course the thoughts of anybody from the Glasgow area are with the victims of the Clutha helicopter crash today.
However, there’s another story in the news today that needs commenting on, namely Angus Robertson’s call for a delay to the 2015 General Election:
That is actually an issue for the UK Government to consider. I think there is a very good case for putting the UK general election back by a year.
The reason why I say that is because of course a Yes result in Scotland will lead to a very, very intense period of negotiation between the UK Government and the Scottish Government — transitioning Scotland from a position within the UK into the EU, Nato, the United Nations and agreeing a whole series of other important measures.
I think it is going to be very important for decision makers at Westminster to wake up to the consequences of the Yes vote and why it will be in their interests to have a grown-up relationship with the government and the people of Scotland.
And perhaps being diverted by a general election in the middle of that process is certainly something one should be thinking about.
Predictably, the Unionists are trying to portray this as an evil Nationalist ploy:
Margaret Curran, Labour’s Shadow Scottish Secretary, said: “The SNP want another year of the Tories. Another year of the bedroom tax, austerity and David Cameron and if they win they’d rather negotiate with David Cameron than Ed Miliband. […]”
A UK Government spokesman said: “Parliament has legislated for fixed-term parliaments and the next general election will be in May 2015. The Scottish Government knew this when they chose the referendum date.”
It’s important to reiterate that this isn’t a Scottish problem. Angus Robertson is just pointing out what the rUK politicians should already be thinking about for their own sake.
Does any rUK politician really want to conduct a general election campaign six months after a Scottish Yes vote (which would have to take place in Scotland, too)? Will Labour want to write a manifesto while the Scottish politicians are still an integral part of their party structure? Would they not all prefer to get the Scottish independence issue dealt with first, and only then elect a new rUK parliament without any interference from Scottish politicians?
To be honest, it might be in Scotland’s interest for the 2015 election to go ahead, simply because the Scottish negotiation team will find it much easier to run circles round the newly elected rUK government than to deal with one negotiation partner throughout.
However, it’s definitely not in the rUK’s interest, and I think Angus Robertson should be praised for pointing this out to them, not abused as if he was trying to score party-political points.
One of the recurrent criticisms of the Scottish Government’s White Paper that was released yesterday is that it doesn’t specify a Plan B, for instance in case the rUK vetoes a currency union. Many people are asking why the document couldn’t just state that if they fail to achieve a currency union, an independent Scotland will create its own currency, linked 1-to-1 to the rUK pound, for instance.
The reason they haven’t — and can’t — do this is because it would give away their negotiating position prior to the post-referendum independence negotiations with London.
If the Scottish Government said that their first priority was a currency union with the Bank of England as the lender of last resort, their second one a currency union with a Scottish lender of last resort, and their third one a separate Scottish currency, Westminster could simply pick the answer they liked the best and veto the ones above it. In other words, Scotland cannot achieve the best possible deal if we give away our negotiation strategy.
Pre-negotiating some of the thornier questions would be an excellent solution to this, but this has been ruled out point blank by Westminster.
The three principles of getting the best deal, providing maximum clarity and refusing pre-negotiation are in direct conflict. We can display this in a triangle (see above). Only two principles of this triangle can be met, but not all three:
Given this trilemma, it’s understandable the Scottish Government has chosen the third option. They can’t force London to pre-negotiate anything, even if it would clearly be best for the voters, and of course they can’t accept not getting the best deal for Scotland.
Unfortunately, many undecided voters haven’t understood this, and they keep asking for more information. We need to explain to them that the Scottish Government has provided as much detail as they possible can without harming Scotland’s interests.