Chris Giles gleefully reports in the FT this morning that:
Oil rout would have wrecked an independent Scotland's finances
before adding:
Had Scotland voted Yes to independence, it would now be looking at oil revenues of £1.25bn instead of £6.9bn in 2016-17
What Giles fails to mention is that the UK is suffering the same loss.
And a loss of VAT as well, at least.
Of course, he may assume that the oil price will stimulate growth and so assist recovery and so make good that shortfall. But he fails to mention any such impact for Scotland so I assume he ignores it in the UK too.
In which case what he also fails to mention is that Osborne is going to be quite a few billion short of his stated targets too. But saying so might have spoiled Giles' glee. So I will do it instead.
And also mention if ever there was a case for a variable carbon tax based on fluctuations in the oil price then this situation may create it. But maybe that's a little too creative for Giles.
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However strong (or weak) the political and emotional arguments were for Scottish independence, there’s no denying the economic ones were pure fantasy.
No
No one expected this oil price crash
As usual, you are spouting complete nonsense
No one, except oil expert Chris Cook. He’s been forecasting it for over 3 years.
Scotland’s economic game plan on oil isn’t all about the raw material: it’s about the ever-increasing cost of the machinery and skills required to get at decreasingly-accessible oil.
The current, temporary, drop in prices has interrupted investment in ‘recovery’ fields and deep-offshore drilling. But the faster the cheap oil is depleted, the happier the Scottish Exchequer would be.
Would be, if only there existed a government that encouraged investment; our current regime is only interested in extracting rents, and absolutely does not want a skilled workforce with dangerous democratic ideas and real economic power.
The ‘Wings Over Scotland’ blog makes this point in its normal rather disrespectful manner :
“Yet let’s ponder the reality for a moment. (quoting Ian Martin in the Telegraph:)
“If Scotland had voted Yes, Salmond would right now be facing his first major economic crisis and a devastating shortfall in revenue.“
No he wouldn’t, you imbecile. If Scotland had voted Yes, independence negotiations would barely have even begun. The oil price, and the revenues derived from it, would “right now” still be Westminster’s problem. Scotland wouldn’t have been independent until spring 2016 at the earliest, and Unionist commentators like Martin insisted that in reality the process would have taken years.
If the oil price is still in the doldrums 18 months from now, the No camp will have a small, if still unseemly, degree of political justification for gloating over the job losses and potential economic consequences. Until then, drawing any sort of link between the oil price and the economic case for independence is empirically idiotic.”
What was it they said during the referendum about oil prices being ‘volatile’? The chances of oil prices being as low as they are now in 18 months seem rather remote to me.
Surely it is a question of scale here. In an independent Scotland oil would count for 15-20% of government revenue, in UK it counts for 1-2%.
That makes it around 15 to 20 times more important for Scotland as for the rest of the UK.
In addition, doesn’t Giles argue that lower oil price will effective boost aggregate supply in the UK economy and the multiplier effect of this would be greater in UK than in Scotland given oil would be major independent Scotland’s exports?
Or am I missing something.
I think Giles is an optimist as to when the effect will come through
And re Scotland – see the point made above that this impact would always happen whilst it was part of the UK
Ok on multiplier but the point about scotland is moot surely. Giles is saying the Scottish Government forecasts, which they would be using to plan and borrow against, are severely depleted and that would undermine efforts to set up a new country.
While I dont dispute the government revenue problem is salient for the UK oil accounts for circa 2% of total revenue. Projections showed it accounted for about 15% in an independent Scotland so the difference in scale is clear.
It ‘s indisputable this would harm Scotland
I disliked Giles’ glee and failure to follow on the logic
Scotland needs diversified power as much as anywhere
The economic effect of a fall in oil price impacts Scotland more severely whether part of the UK or separate. The real effect of reduced activity is impacting the staff and companies involved now.
If more of the people of Scotland had believed the lies and exaggerated claims of separatists, including Wings over Scotland, and we had seen a Yes vote, the fall in oil revenue would be and become a Scotland problem.
When we of a unionist persuasion suggested that the price of oil, and the yield from it, could fall we were said to be “scaremongering”. Now Wings say, even if we had voted Yes, it would not be Scotland’s problem as we would call it Westminster’s problem! Idiots!
I do not think they are idiots
I nearly censored that out
But your point re labour etc was a good one
I do think that the Wings people are idiots. They spouted more nonsense and bile during the referendum than perhaps anyone else. They assumed that by shouting down opponents they won an argument. They told Yes supporters where to find Better Together events and coordinated the intimidatory groups that aimed to disrupt them.
They LOST the referendum but cannot accept the result gracefully.
Then we disagree
And let’s leave it at that