Discuss your views of the Scottish Referendum with the UK government NOW CLOSED

[MichelleMumsnet]

With fewer than 200 days to go until the Scottish referendum, UK Government has produced the latest edition, in a series of information packs, focussing on money and the economy in the context of the independence debate.

Read more: Scottish independence referendum: Money and the economy.

UK Government wants to find out what Mumsnetters' views are of the Scottish referendum coming up in September. When it comes to the prospect of Scotland going it alone and possible impacts on the economy, like changes in currency and taxes, what are your views? Whether you're Scottish or not we'd love to hear your thoughts.

Danny Alexander, Chief Secretary to the Treasury says, "As part of the UK the Scottish economy is growing, inflation is down and more people are in work. By remaining part of the UK, Scottish industry and jobs will be protected by the generous freeze on duties on spirits and the £3bn tax break for oil and gas industries we announced at the Budget, as well as the big cuts in income tax helping 2 million Scottish workers.

This new pack sets out some key facts people in Scotland need to know before the referendum in September. I urge everyone to read up on the facts and understand the true benefits being part of the United Kingdom brings to Scotland."

Mumsnet will be hosting various content and activity in the run up to the referendum from all sides of the debate, so do keep a look out for these in the coming months.

Thanks,

MNHQ

Imogen, plenty people work in different countries from the one they live in. I have friends who work in the oil industry and are based in various countries & get paid in Euros or dollars.
Some live & work in Scotland & get paid in Euros as well.
I really don't see how it would be a problem.
I have bank accounts in Republic of Ireland, work I've done there can get paid in that account or my Scottish one. It's just not a big deal at all.

God yes! Avoid avoid avoid the comments sections off all news sites - it seems to attract the scariest fundamentalists from both sides, and someone always shouts, "Nazis!" about 10 posts in.

This is very true.

There are mistakes in the White Paper. This blog entry sets out some of the key ones:

• "The pound is Scotland’s currency just as much as it is the rest of the UK’s”

-"Scotland would … be entitled to a fair share of the UK’s assets"

And then of course the fees claims.

239. Are you confident that the Court of Justice of the EU will support this position?

Each member state is free to adopt its own domestic policies, consistent with the objectives of the EU. We believe that our fees policies contribute to student mobility across the wider EU, while addressing the consequences of the unique situation of Scottish independence. In these circumstances we believe that it will be possible to deliver our policy in a way which is compatible with EU requirements.

This isn't the ECJ's duty, it would be the EU Commission.

And then of course the fees claims

I have to confess to being rather dubious about that theory too.

"The pound is Scotland’s currency just as much as it is the rest of the UK’s”
-"Scotland would … be entitled to a fair share of the UK’s assets"

I guess it all depends if Scotland is seen as a successor state or not. If it is then yes, rUK would get the lot and Scotland would get nothing . except physical assets located in Scotland's territory. However, this nothing would also include take on non of the debts, liabilities or treaty obligations of rUK. A position that would put rUK in a pretty difficult place.

No CU would be bad for rUK because, with current credit rating already having been downgraded, rUK's acceptance of 100% of the debt while losing 10% of it's economy can only lead to further downgrading.This in turn would lead to higher borrowing costs (watch your mortgages, credit card interest rates soar) and a downward spiral will ensue.

Yes, it would hurt the rUK. But it is terrible economics to even suggest that Scotland could walk away from the debt. The consequences for a new state would be much, much harder than it would be for London. It's not the bargaining chip the SNP are making it out to be.

Professor Muscatelli, writing in the Financial Times points out further disadvantages to rUK; extra transaction costs for businesses, reducing economic growth... He sums it up as "economic vandalism".

I have my own opinions on Muscatelli, but the core of his argument are transaction costs. There are transaction costs everywhere. As I pointed out above, rUK does and would do much more trade with the Eurozone and with the USA than it does/ would with Scotland, so under this logic they should also adopt the dollar or the Euro. He ignores the problem of English tax payers being required to bail out Scottish financial institutions post independence, which is really completely unthinkable. The idea of a currency union also has to be discussed- why 'win' independence and then cede it again?

As for The Sunday Herald's story re CU not being evidence of a bluff, how about Professor Leslie Young's devastating critique of the Treasury letter that purports to set out the reasons for Osborne et al's stance that "there will be no CU"? (And I can't wait to see Part B of that Report, which doesn't seem to have been published yet.)

I shall read this tonight, thanks.

These people are lying to you, to your face. Why on earth would you continue to trust them with our future, our children's future?

What is your evidence for 'lying'? That you don't like the answer? I see no evidence of a bluff.

I guess it all depends if Scotland is seen as a successor state or not. If it is then yes, rUK would get the lot and Scotland would get nothing . except physical assets located in Scotland's territory. However, this nothing would also include take on non of the debts, liabilities or treaty obligations of rUK. A position that would put rUK in a pretty difficult place.

This makes no sense- A successor state depends on the initial state dissolving, which obviously isn't going to happen. Scotland will be a new state.

none of the debts, liabilities or treaty obligations of rUK
This isn't actually as good as it looks.
No debt- no international credit. We'd be blacklisted.
No treaties- I sure as hell don't fancy our chances of recreating all of the treaties Scotland currently enjoys as a member of the UK in the 18 month gap!

Yes, it would hurt the rUK. But it is terrible economics to even suggest that Scotland could walk away from the debt. The consequences for a new state would be much, much harder than it would be for London

But it wouldn't be. Successor countries don't take on the debts of the continuing country. It is the way things are done.

He ignores the problem of English tax payers being required to bail out Scottish financial institutions post independence, which is really completely unthinkable

Again they wouldnt. Convention dictates that when a bank operates across more than one country then each country takes on its share of the liability. Eg 90% RBS operations in rUK so rUK is responsible for 90%

The idea of a currency union also has to be discussed- why 'win' independence and then cede it again?

Because in the short term at least this makes most sense for both countries.

This makes no sense- A successor state depends on the initial state dissolving, which obviously isn't going to happen. Scotland will be a new state

Successor state is such a confusing term...

CONCEPTUALISING THE BREAK-UP

11. There are three ways that the constitutional and consensual break-up of the UK could be regarded internationally.

Continuation and secession

The existing state (UK) would break into separate entities - "Scotland" and "the RUK". The larger, more populous entity (RUK) would become the 'continuing' state. The smaller entity (Scotland) that wished to leave would secede and become a new state and would (somewhat confusingly) be known as a 'successor' state. The continuing state (the RUK) would inherit the vast majority of the rights and obligations of the UK whereas the successor state (Scotland) would essentially start anew internationally.

Separation

The existing entity (the UK) would break into two states (the RUK and Scotland) and each would resume their pre-1707 Union status. This would involve a 'disaggregation' or 'splitting' of pooled sovereignty so that Scotland and RUK would each maintain all existing legal relationships as far as was possible given the changed situation.[7] This is sometimes also referred as 'the co-equal states' scenario.

Dissolution

The existing entity (the UK) would dissolve and become extinct. Two new states would come into being (the RUK and Scotland) but neither new state would lay claim to the legal personality of the UK which would have ceased to exist. It would essentially amount to a clean international slate for both states.

www.publications.parliament.uk/pa/cm201213/cmselect/cmfaff/643/64306.htm

Scotland wouldn't be a successor state, because the UK would continue.

Again they wouldnt. Convention dictates that when a bank operates across more than one country then each country takes on its share of the liability. Eg 90% RBS operations in rUK so rUK is responsible for 90%

I worded this wrongly, sorry. What I mean is that an independent Scotland would be at more of a risk of needing a bail out (a less liquid debt market, a lack of an institutional track record and institutional uncertainty, higher economic and fiscal volatility, larger future potential debt burden; a larger financial services sector, with larger contingent liabilities, as a share of GDP; and reduced monetary policy flexibility to respond to external shocks). This would have a knock on effect on rUK in a currency union, and they are quite right to refuse to not want to get involved!

We are cross posting!

Did you actually read the text you linked from?

Immediately under the section you linked it says Of the three scenarios outlined above, only the first two (the continuation and separation models, respectively) have been relied upon by the UK and Scottish Governments. The third option, dissolution, was not considered to be relevant to the situation under consideration by either witnesses to the inquiry or by other legal experts.

Did you actually read the text you linked from?

?
"The existing state (UK) would break into separate entities - "Scotland" and "the RUK". The larger, more populous entity (RUK) would become the 'continuing' state. The smaller entity (Scotland) that wished to leave would secede and become a new state and would (somewhat confusingly) be known as a 'successor' state The continuing state (the RUK) would inherit the vast majority of the rights and obligations of the UK whereas the successor state (Scotland) would essentially start anew internationally"

I worded this wrongly, sorry. What I mean is that an independent Scotland would be at more of a risk of needing a bail out (a less liquid debt market, a lack of an institutional track record and institutional uncertainty, higher economic and fiscal volatility, larger future potential debt burden; a larger financial services sector, with larger contingent liabilities, as a share of GDP; and reduced monetary policy flexibility to respond to external shocks). This would have a knock on effect on rUK in a currency union, and they are quite right to refuse to not want to get involved

I agree that Scotlands financial sector is worryingly large, guess we can only hope that Standard Life leaves :-D

I thought you were arguing that the UK was dissolving, thus Scotland would be a successor state and have no obligation to take on 'the debts, liabilities or treaty obligations of rUK?' This would only happen in a dissolution, which your own linked stated quite categorically isn't the case here.

I agree that Scotlands financial sector is worryingly large, guess we can only hope that Standard Life leaves :-D
Pick your poison, isn't it? I find it quite a grim choice.

I thought you were arguing that the UK was dissolving, thus Scotland would be a successor state and have no obligation to take on 'the debts, liabilities or treaty obligations of rUK?' This would only happen in a dissolution, which your own linked stated quite categorically isn't the case here

No I was arguing that maybe:

The existing state (UK) would break into separate entities - "Scotland" and "the RUK". The larger, more populous entity (RUK) would become the 'continuing' state. The smaller entity (Scotland) that wished to leave would secede and become a new state and would (somewhat confusingly) be known as a 'successor' state. The continuing state (the RUK) would inherit the vast majority of the rights and obligations of the UK whereas the successor state (Scotland) would essentially start anew internationally

In the case of dissolution there would be no continuing or successor state, just two brand new ones where everything would be up for negotiation for both rUK and Scotland.

Yes, that looks like the most realistic outcome.

You are also saying that means that iScotland 'take[s] on none of the debts, liabilities or treaty obligations of rUK. A position that would put rUK in a pretty difficult place.'? Yes? Or am I reading that wrongly?

They would take on none of the treaty obligations, but debts and liabilities would have to be equitably divided under international law.

But the debt is not a standalone thing. On independence rUK will have to look at the combined assets and liability of the UK as a whole. if rUK does not agree to a fair split of assets, I'm sure iScotland would not agree to a then unfair division of assets.

If Scotland takes its fair share of the debt (as it should) then it also takes its fair share of the assets (as it should)

Scotland does not walk away with nothing, and a share of the debt.

I am so confused, I can't tell what point you are actually trying to make.

No debt is not a good thing, even although it looks like it. Scotland is not really in a strong position if that is the default threat to the Westminster negotiating party.

Good article on debt here:

niesr.ac.uk/blog/scottish-independence-and-uks-debt-burden

Deeply confusing article which I don't understand here (seems to suggest there isn't really any debt?!)

www.3spoken.co.uk/2014/03/scottish-independence-myths-national.html

And finally

They would take on none of the treaty obligations, but debts and liabilities would have to be equitably divided under international law
Legally under international law the position is clear: if the remainder UK keeps the name and status of the UK under international law, it keeps its liabilities for the debt. The UK took out the debt, and legally it owes the money. Scotland cannot therefore ‘default’

www.futureukandscotland.ac.uk/blog/currency-reflections-legal-issues

I am so confused, I can't tell what point you are actually trying to make

See above post. If Scotland as to be a successor state, and rUK as continuing state then the continuing state is legally liable for the entire UK debt, therefore Scotland cannot "default" Therefore Scotland would not somehow get a bad reputation for not taking in debt.

If Scotland as to be a successor state, and rUK as continuing state then the continuing state is legally liable for the entire UK debt, therefore Scotland cannot "default" Therefore Scotland would not somehow get a bad reputation for not taking in debt.

This is not true. Really, it isn't.

First of all, here is the legal opinion of three professors: www.publications.parliament.uk/pa/cm201314/cmselect/cmscotaf/uc140-xiii/uc140xiii.pdf

Most importantly: 'For an independent Scotland to turn round to the rest of the UK and say, “We’re not going to pay off our portion of the debt,” would be contrary to those principles of international law.'

EU entrance would be out of the question if we repudiated the debt. Absolutely.

And then you have the practicalities. No one would lend money to iScotland, because economic responsibility must be established by example and there wouldn't be one. There would be no cash reserves, because they are an asset and as you have said, no assets, no debt.

This is one of the issues. On the major things there is always one lot of experts disagreeing (ever so politely) with another group of experts.
However, even going by your lot, "a fair and equitable division of assets and liabilities" does not mean rUK can expect Scotland to take a share of the debt and no share of the assets.

No one really thinks iScotland would "default" on the UK debt,just as no one seriously believes rUK would refuse to enter into a currency union. It is all posturing, and will all be up for negotiation.

All our various quotes and experts boils down to is:

Scotland takes none of the assets and none of the debt
Or
Scotland takes a fair share of the assets and a fair share of the debt

Can we agree on that? (Please, I'm knackered!)

As confused as I am by many things, the UK Treasury (which would become the rUk Treasury) has already announced that, however the vote goes, and whether we are "allowed" to use the £, they accept all responsibility for the debt.

And yes, ItsAll, I think that's a fair summary; if we take on our share of the debt (which we are willing to do) we also get our share of the assets.

Inc BoE.

They actually said

The technical note makes clear that the continuing UK Government would in all circumstances honour the contractual terms of the debt issued by the UK Government. An independent Scottish state would become responsible for a fair and proportionate share of the UK’s current liabilities.

An entirely separate contract between the continuing UK Government and an independent Scottish state’s Government would need to be established. The respective shares of debt and the terms of repayment would be subject to negotiation.
www.gov.uk/government/publications/uk-debt-and-the-scotland-independence-referendum

So they do expect Scotland to take a share, but accept that it will have to be negotiated.

Yep, debts and assets go together. No either or!

OldLady, BoE is not an asset, it is an institution and therefore does not have to be divided.

BoE is not an asset, it is an institution and therefore does not have to be divided

In that case we'll have all our cash back then please :-)