About 55% of the Scottish people who voted in the Sept. 18 referendum for Scottish independence voted against it. However, in the United States, images of “Vote Yes” signs and pro-independence rallies dominated the news media leading up to the vote.
My American classmates all seemed to really buy into the Scottish independence movement. “Give Scotland a chance!” my classmates would tell me, but a shift of focus is necessary now that the majority of the Scottish people have voted “no.” The reality is that Scotland is not ready for independence for various economic reasons.
The first: according to The Washington Post, First Minister Alex Salmond—as well as other pro-independence Scots—planned on funding healthcare, schools, and social welfare programs with revenue from North Sea oil extraction in an independent Scotland. Pro-independence Scots argue funding these important institutions with oil revenue with reports stating that there are still around 30 or even 40 years worth of oil to be extracted in the North Sea.
Nonetheless, it is important to think of the future. These supplies will inevitably run out, and one must ask what will happen in the future of a country that funds its healthcare, social welfare programs, and schools on a fleeting resource. Even with oil production sharply declining in Scotland, no definitive plan has been put forth for after the oil supply runs out. Planning to seamlessly fund a new country on a transient resource is impractical and frankly Utopian.
Second: Scotland’s economy relies on its financial sector, but numerous Scottish financial institutions have reported that they will move to England in the event of Scottish independence. Pro-independence Scots largely avoided arguing against this downside of independence, as it would certainly be detrimental to Scotland.
The Telegraph reported that around 20,000 to 40,000 jobs would move to England with this “mass exodus” of financial institutions. The Center for Economics and Business Research even warned Scots that independence would be expensive due to Scotland’s large financial sector in relation to the size of its economy. Ergo, it would be wise to keep the Scottish financial sector intact by keeping financial institutions in Scotland.
Third: Scottish independence would be detrimental to the value of the pound sterling, which an independent Scotland would still use as currency. The majority of economists surveyed by Bloomberg projected up to a 10% decrease in the value of the pound sterling versus the U.S. dollar should Scotland secede.
Without secession, the majority of economists surveyed said the pound sterling would strengthen by 2-10% versus the U.S. dollar. Some pro-independence Scots try to twist these statistics to seem beneficial for independent Scotland as a weaker currency will likely increase tourism, but there are just too many detrimental side effects from the weakening of the pound sterling to pretend this could be beneficial. Even the smallest decrease in the value of currency can slow economic growth, which Scotland would certainly be better off avoiding.
While Scottish independence seems like a good idea in theory, and it would likely mean that Americans could visit Scotland for less money, we must recognize that it would be disadvantageous for Scotland to claim its independence at this point in time. Should Scotland rewire its economic frameworks to better prepare for an independent Scotland, perhaps voting “yes” will be less precarious in the future.
Currently, however, too much of Scotland’s economy would be at risk with secession.