Welfare independent Scotland entirely dependent on five factors
The Scottish economy is in itself far from the riches of deposits or the abyss of despair within the UK. income levels, unemployment, productivity and inequality extraordinarily similar to the overall average for England, Northern Ireland, Scotland and Wales.
Fully integrated, after 307 years of existence of the Union, Scotland shares the economic institutions of the UK, its tax system and powerful security mechanisms that support economic areas which are in the complicated position, for example, Northern Ireland, and allocate funds from such popular destinations as the London.Glavnym and the huge difference is the oil. Scottish public finances threatens chaos if the country does not receive most of the profits from the oil after the declaration of independence, putting thus its original well-being and prospects dependent on the conditions of the divorce. Subsequently, the economic prospects of an independent Scotland will be determined by its ability to change. Five key factors play a decisive role.
Currency
Independent Scotland should take for granted the fact that the rest of the UK refuses to enter into a formal currency union. Economists believe that the best available option will be initially unilateral use of the pound sterling, which was soon followed by the subsequent establishment of the Scottish Central Bank and the currency.
This option is undeniable is appropriate and can bring the stability of the currency, if the Bank of Scotland Scottish tie the pound to the pound sterling, about Denmark captures crown against the euro. The exchange will be required to increase the foreign currency reserves needed to protect the peg and the lack of economic stability, which may cause a floating exchange rates.
The main risk is the outflow of capital from Scotland and its banks, initiated by people who might be afraid of the future devaluation, and prefer to have their financial assets expressed in sterling, euros or dollars. Neville Hill said of Credit Suisse: "The question is not whether Scotland will keep the pound, and whether the pound will remain in Scotland".
reserves
To protect the peg independent Scotland would require foreign exchange reserves far in excess of 15 billion. Pounds, which at the request of Mark Carney, the chairman of the Bank of England, are in the "upper region of the range" that can inherit the country from the UK. In order to meet the level of Danish stocks as a proportion of national income, Scotland will need 34 billion. Pounds.
Ronald McDonald, a professor of the University of Glasgow, who worked together with the campaign in favor of the union, said that the need for the accumulation of reserves is "a set of austerity measures"That will be the end for any currency pegged to the pound. Scotland can borrow for the accumulation of protective equipment in the form of foreign currency by creating a foreign exchange risk for the Scottish people, or to their creditors. Thus, such a credit can be extremely expensive.
public finances
British distribution of assets and liabilities will require difficult negotiations. Given the already stretched public finances of Great Britain, Angus Armstrong and Monique Ebell wrote in the latest issue of the journal Oxford Review of Economic Policy ("Oxford Review of Economic Policy") That for any reasonable distribution independent Scotland will begin its life "with a sizeable debt burden"That cause the need for spending cuts or tax increases "for many years"Which will be much more severe than those faced by the UK in 2010.
Alex Salmond, leader of the Scottish National Party, want to put a threat to life and does not agree that any British debt was Scottish. However, this comes at a cost, as the Scotland need UK support on issues such as the application for accession to the EU.
Provided that both sides deem fair distribution, Scotland is likely to face more stringent spending cuts and tax increases in comparison with England, which will contribute to the decline in profits from oil in the medium term. Supporters of the National Liberation noted excessive pessimism official forecasts of oil revenues, but they are distinguished by a constant excess optimism in recent years.
Performance
In the long term well-being of an independent Scotland would depend on the ability of the nation to increase its own growth to sustain higher living standards. This will require an increase in productivity - that is, more power for each hour worked or capital employed compared with current levels.
Sustained improvement in productivity growth is a cherished goal for any economy, and it is much easier said than done. At the moment, the Scottish economy is dependent on the financial services and oil is stronger than the British economy. Both of these sectors are characterized by extremely high performance, but they are on the decline, as dwindling oil reserves in the North Sea is becoming increasingly difficult to produce and extremely bloated financial sector has reduced the UK.
The Scottish Government hopes that lowering corporate taxes stimulates new entrepreneurial spirit - claiming that he will "an important tool for competitive advantage". In this respect it is similar to the behavior of the Westminster Government, which reduced the rate of the British. Such as the need to have a far greater impact in Scotland than it had in the UK as a whole, to compensate for problems caused by oil and the finances that are already experiencing the nation.
Demography
Scottish population will age faster than the UK, increasing pressure on public finances and health care costs. will have to attract more workers and immigrants to increase the rate of growth of Scotch. The Scottish Government has promised that the new "controlled, transparent and efficient" migration system to attract highly qualified people that promotes incomes, employment and public finances.
The risk lies in the fact that Scotland can not afford to be choosy in this simple choice of immigrants, as suggested by the government, especially this contributes to the fact that it failed to attract in recent years, the same number of migrants, many attracted by the English regions with a similar level of salaries.
Forexpf.ru prepared based on The Financial Times Source: Forexpf.Ru - Forex Market News
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