Thursday, 17 April 2014

Scotland is the 6th / 8th / 14th Richest Country in the World.

In September 2011 the SNP's John Swinney said "Scotland would be the 6th wealthiest country in the world" if it was independent.  Furthermore, the SNP's #YesScotland claims that "Scotland is the 8th richest country in the world". In March 2014 John Swinney said Scotland "ranks 14th in world league tables" in terms of wealth.  Spot the trend?

So what's all this based on? You guessed it, it was taxpayer funded analysis undertaken by the Scottish Government for the SNP/#YesScot Government. Although the method is not clear, it estimates Scotland's GDP and compares it to other nations. 

GDP (Gross domestic product) is the market value of all officially recognized final goods and services produced within a country in a year. For most countries it is quite a crude but usable measure of the value of their economy. However, where a country earns a lot money overseas or where its industries are owned outside its borders, it does not tell us much. As Scotland's oil and whisky industries are substantially owned/licensed outside the country, GDP is less relevant. Indeed, independence will mean that about a quarter of all Scottish jobs and about a third of Scottish GDP (including North Sea GDP) will be in foreign hands. This point was made quite publicly by Alex Salmond's former economic advisor Prof John Kay who said it is a "mistake" for voters to think claims Scotland will be one of the world's wealthiest nations after independence would leave them with more cash and "Scots would make a mistake if they thought that calculation showed independence would make them better off.". 

The conclusion that Scotland's finances are not as SNP/#YesScotland like to pretend can't be a surprise.  SNP/#YesScotland Goverment's own data show that Scotland has a huge deficit -  £12.1 billion (including oil). That means we spend far more than we earn. Our deficit is 8.3% of GDP (and rising), whereas for the UK as a whole it is 7.3% of GDP (and falling). If Scotland were to leave the UK, it would need a plan to reduce the deficit to zero. To do this taxes could be increased or public spending could be cut... or perhaps both. That reality is rather different to the  SNP/#YesScotland pledge to cut taxes and improve services. 

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