What would the effect of $60 Oil have been on an independant Scotland(3 Posts)
As I understand it it's pretty bad news for jobs in some parts of Scotland as it is, but can someone who understands better than I do explain how an independent Scotland would have been affected?
Looking at another country which is very dependent on the price of oil, I have been watching the value of the Russian Rouble, which has halved in the last year.
Certainly this was affected by foreign businesses and wealthy Russians taking their money away when Putin began his military adventures to the West, but the graph of Rouble value falls tracks the graph of oil price falls, except that it has done much worse as people became aware that Russia is in a financial crisis, and approaching a political crisis.
Russia does have an extra problem in lacking other industries and infrastructure, and having established a combative rather than a co-operative relationship with other prosperous countries.
An EU country would have had assistance and loans, so I am sure an independent Scotland could have taken on debts to keep it going while it restructured, and has other industries, even though the Financial Services sector in particular would have suffered to the extent that rUK customers want an rUK supplier; and Shipyards which do rUK navy work.
The short answer is that Scotland would have been totally buggered; the Scottish currency crashing, so imported inflation rising, Scottish interest rates up in double digit figures to help protest the currency by stemming the currency outflow - and without established capital markets to ISSUE Scottish government bonds to "take on debts", looking for international hand outs.
THIS was the reason Osborne and any other politician that understood how economies function, was not going to allow an independent Scotland so reliant on oil, to keep the English Pound Sterling, our interest rates and access to the Gilt market - especially when the UK is running a £100 billion deficit, the cutting of which, the SNP leaders call "austerity", rather than good UK living within our means, housekeeping.
So the sheer independence-or-bust arrogance of Mr Salmond is now there for all to see, despite all the warnings on a 'before and after' basis;
July 2014; “OBR: North Sea oil and gas could produce £20bn less in revenue than forecast over next three decades”
”Scottish First Minister Alex Salmond dismissed the figures as "stuff and nonsense"
”Campaign leader and former chancellor Alistair Darling said: "Today's figures confirm what we already know - the oil is running out and the tax we will get from it is falling. Being part of the UK means we can make the most of what is left in the North Sea without putting the funding for our schools and hospitals at risk. It's the best of both worlds for Scotland."
”The OBR report said "total UK oil and gas production has fallen every year since 1999, with particularly steep falls of 19% and 14% in 2011 and 2012 respectively".
”It added: "Oil and gas receipts are the most volatile revenue stream in the UK public finances and forecasting them over even very short horizons is fraught with difficulty.”
”Scottish Conservative energy spokesman Murdo Fraser said the OBR projections "once again highlight the folly of basing your entire economy on the fluctuating price of oil".
December 2014; “Oil rout would have wrecked an independent Scotland’s finances”
“^Scotland’s North Sea revenues would have slumped to one fifth of Holyrood’s preferred forecasts in its first year of independence if Scots had voted Yes in September, according to an Office for Budget Responsibility simulation using current oil prices.”^
”Had Scotland voted Yes to independence, it would now be looking at oil revenues of £1.25bn instead of £6.9bn in 2016-17 — its first year as a new country — while facing a deficit of close to 6 per cent of national income, compared with a UK forecast of 2.1 per cent.”
”Angus Armstrong, of the National Institute of Economic and Social Research, said that in these circumstances, a newly independent country would struggle to issue debt in capital markets. “The volatility absolutely kills you. Having to raise an additional £5bn of debt just because the oil price drops in the past five months would have been very serious.”
“It is very hard to see how Scotland could have raised those levels of debts in year one of independence,” he added.”
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