Scottish independence: Think tank in '˜economic risk' warning

The think tank warned of economic risks of Scottish independence. Picture: Lisa Ferguson

The Centre for Policy Studies acknowledged Scotland is being taken out of the European Union against its will but said leaving the United Kingdom in response “would entail significant economic risk”.

The think tank, founded by former Conservative prime minister Margaret Thatcher, drew parallels between Scotland and debt-ridden Greece in a report entitled “Scotland: Could it become Greece without the sun?”

It said: “Nicola Sturgeon’s push for independence does have some logic from a democratic standpoint.

“Scotland is being taken out of the European Union despite voting to remain within the institution.

“However, the economic backdrop to Sturgeon’s push for independence is not encouraging for her.”

It added: “Scotland’s budget deficit is currently over three times higher than the UK average as a percentage of GDP.

“North Sea oil and gas revenue expectations have plunged. Expected revenues of £6.8 billion to £7.9 billion this year have fallen to just £0.5 billion to £2.8 billion.

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“Two-thirds of Scotland’s exports go to the rest of the UK but just 15 per cent go to other EU countries, further questioning the economic rationale behind Scottish independence.

“Euro membership would expose Scotland to the risk of more asymmetric economic shocks and the European Central Bank would be less capable of responding to shocks compared to the Bank of England.”

It concluded: “Why, therefore, would you break ties with the UK for the purpose of restoring ties with the rest of the EU via European Union membership?

“Furthermore, if Scotland were proposing to adopt the euro as its currency, this would present huge risks for a newly-independent Scotland.

“There is a precedent for a small, romantic country, surrounded by hundreds of islands, perched on the extremity of Europe, seeking membership of the euro: Greece.

“Of course, it would be impertinent to suggest that Scotland’s circumstances are directly equivalent to those of Greece, but it does undoubtedly serve as a useful reminder that countries with challenging public finances can end up suffering inside the euro.

“This will undoubtedly be on the minds of the Scottish electorate should there be a second independence referendum.”

Scottish Conservative economy spokesman Dean Lockhart said: “Although departure from the EU may cause some difficulties, those difficulties won’t be addressed by leaving the UK too.

“We must remember that the UK economy is four times more valuable to Scotland than the EU’s.

“Calling another knee-jerk independence referendum would make the uncertainty even greater.

“The SNP was repeatedly told about the financial risks of separation in the run-up to the 2014 vote.

“The party ignored them then and has shown no signs of heeding them this time either.”

An SNP spokesman said: “This is unforgivable hypocrisy, coming from a right-wing Tory think tank founded by Margaret Thatcher and backed by Brexiteers who have taken the UK economy to the edge of a cliff.

“Even the authors of this report admit that the bogus economic comparisons they seek to draw with Scotland are ‘impertinent’ - and the reality is that Scotland is the wealthiest part of the UK per head outside London and south-east England.

“The biggest risk to Scotland’s economic stability and security - without any question - is the threat to take us out of the EU and a single market of almost 500 million people.”

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