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Eight reasons why staying in the union will destabilise Scotland

May 20, 2014

The no campaign portrays Scottish independence as a leap into darkness. Within the union, the conventional reasoning goes, Scots know what they’re getting.

Project Fear therefore thinks it only needs to periodically tweak the buttons on the scare-o-meter and Scots will scurry back to their tellys, allowing Westminster to carry on undisturbed.

Quite the contrary. Many Scots are figuring out that the union could prove more unpredictable than independence. Here’s why:

Source: UKIP is a source of immense uncertainty. In Thursday’s European election Farage’s rabble  is expected to win up to two-fifths of the English vote, as many as 41 seats, making it the biggest single party. At minimum UKIP looks set to double its support from the last euro poll. The Daily Express says this amounts to a rewriting of the electoral map.

I’m not so sure. UKIP is a bonkers party with nonsense policies. Like the British National Party its light will hopefully fade as the anti-EU protest voters realise that they don’t want these plonkers running Britain. The 2010 manifesto, which Farage labelled “drivel”, called for “taxi drivers to be required to wear uniforms, dress codes for the theatre and for the Circle line on London’s underground to be made a circle again.” The new manifesto is little better.

But in the meantime UKIP is dragging the other parties to the right and prompting them periodically to blurt out ill-considered statements on immigration and Europe. The prospect of UKIP getting even a seat or two in Westminster is horrifying, and holds open the prospect of Labour and the Tories competing with each other to out-Farage Farage. Who knows? Scottish politics is more predictable.

2. The promised referendum on EU membership means Scotland may be forced to choose between a union with England or with Europe: another source of scariness which Scots can’t do much about. Scots may go to the referendum in the knowledge that England could vote to quit the EU. Contrary to what the no campaign says the EU is unlikely to freeze out Scotland. Ditching Brussels may even create more instability than severing ties with Westminster.

3. The bursting of the London housing bubble will cause another economic downturn. London house prices have leapt by an average of £80,000 since the beginning of the year, a rate of change last seen in October 2007 at the start of the global economic crisis. That means that in less than half a year prices in the capital rose by enough to buy a decent semi in Falkirk. The average asking price is now nearly £600,000, almost four times the level in Scotland, which has a more rational market. The housing wealth of just 10 London boroughs could buy all the homes in Scotland, Wales and Northern Ireland combined.

Japan’s asset price explosion carries eerie parallels. In 1989 the land underneath Tokyo’s Imperial Palace was rumoured to have been worth as much as the entire state of California in the same year. We’re not quite there yet, but the Japanese crash caused the economy to flounder for decades. Scotland should distance itself from any similar calamity.

4. The London financial sector remains the biggest source of risk for the UK economy.  Independence would reduce this source of instability for Scotland. City cheerleaders tout the square mile as a source of strength when in fact the banks avoid more tax than other industries, create fewer jobs, suck in talent which would be better employed in productive industries and over-concentrate economic activity. Finance caused the global crisis and has even been described as a curse. Scotland’s economy is more diversified than England’s. All popular Scottish parties recognise the risks of over-reliance on finance.

5. Scotland plans to use North sea oil to foster stability. Scottish parties broadly support the oil fund and talk of the need to invest the proceeds from oil or use it to pay down the debt, unlike the Westminster parties which would continue to fritter it away. Nobel prize-winner Joseph Stiglitz was correct to say that Britain should have invested its oil revenues from the start instead of squandering them to prop up the shaky 1980s economy. Thatcher’s public spending cuts were only viable because of a readily-available stream of hard cash. If Scotland stays in the union there’s no reason to believe much would change.

6. Scotland’s electoral system improves policy certainty. The first-past-the-post system, as is well known, means Westminster parties can foist half-baked policies on to Scotland without having to bear the consequences. There are more pandas in Scotland than Tories, so they can test out their inegalitarian schemes north of the border first without losing MPs. Think poll tax and privatisation. Who’s to say they won’t punish Scotland further if it votes no in September?

A winner-takes-all electoral system generates boom and bust. The Condem coalition is currently praying that it can sneak back in before the property bubble pops, a bubble it has purposefully pumped up in order to make its own electoral base feel richer. Holyrood is more consensual and gradualist – not because Scots are more touchy-feely, but because the system was designed that way. And the white paper is in effect the SNP manifesto, bringing greater clarity to the debate than any Westminster party is able to.

7. Continued austerity makes everyone worry about the future, not just those whose benefits are being cut. The cuts have plunged 36,000 Scots into poverty, causing some with mental health issues to starve to death or kill themselves. One charity boss called this a “crime against humanity”.

At a less extreme level, unemployment benefits calm people’s fears about their prospects and allow the temporarily jobless to look for work: it’s called social security for a reason. Independence would create the opportunity to build a fairer society. More equal societies are usually more stable, with less poverty and crime, better education and more cohesion.

8. Economic stagnation throws doubt over jobs and wages. Even if you’re lucky enough to have a job, you’re likely to be worse off now than six years ago given that on average real wages have fallen. Unemployment is stuck stubbornly at over 7%, while economists talk of ‘secular stagnation’ – code for permanent slump. Scotland’s economy has grown slightly faster than England’s since the start of the crisis because investment has been higher, partly the result of Scottish government policies. All the signs are that any independent government would reflate the economy and tackle unemployment.

Osborne’s ultimate economic scare story – that he wouldn’t let Scotland keep the pound – is just bluster. It’s not likely to be his decision anyway, and why would England purposefully cripple its main trading partner? Even if Scotland were excluded from a currency union it could use the pound if it wanted to, just like the 20 or more countries which use the dollar or peg their currencies to it without Washington’s say-so.

Don’t believe the scaremongers. In a sense the union has always been a source of uncertainty for most ordinary Scots. They’d be safer distancing themselves from the Westminster stramash and crafting sane policies which Scotland actually voted for.

2 Comments leave one →
  1. May 21, 2014 8:38 am


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  1. Why I’m voting for Scottish independence | Emergent Economics

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