SCOTS WARNED OF CHAOS
They’d have to raise tax or slash their spending, says top economist
Paul Johnson, director of the Institute for Fiscal Studies, said the nation could also be pushed into joining the euro if it wanted to remain in the EU.
He pointed to how public spending is more than £1,000 higher per person north of the border, despite tax revenues being similar.
The fall in the price of oil had made Scotland’s financial position more difficult since the last independence referendum in 2014, he said, adding that the Scottish economy could suffer even more if it loosened its trading ties with the rest of the UK.
‘We get just about as much tax per person from everyone in Scotland as we do in the rest of the UK,’ Mr Johnson said.
‘But spending in Scotland is more than £1,000 per person higher than spending in
‘Big transfer of money’
SCOTLAND would be forced to raise taxes or slash spending if it became independent, a leading economist warned yesterday. the rest of the UK. So what that means is that there is a big transfer of money from the rest of the UK to Scotland … if Scotland were to become independent it would have to either reduce its spending by more than £1,000 per head or increase its taxes by more than £1,000 per head.’
The question of whether Scotland would be able to continue using the pound was a major argument in the 2014 vote. Yesterday, Mr Johnson argued Brexit could make it less likely.
He said: ‘It would clearly be more difficult to maintain the pound if the UK was outside the EU and Scotland was inside … the pressure on Scotland politically from the rest of the EU to join the euro would be significant.’
He told BBC Radio 4’s World At One: ‘ Two things have changed since the last Scottish referen- dum … the Scottish fiscal situation has got worse, relative to that of the rest of the UK, because the oil price has gone down …
‘Secondly, the Brexit vote means the UK looks like it is going to come out of the single market. But if an independent Scotland were to be in the EU, within the single market … that potentially hinders it very badly in terms of its access to the UK market.’ Business leaders warned a second vote would create uncertainty for firms.
Liz Cameron of the Scottish Chambers of Commerce said Scotland’s two referendums and two elections in less than three years had caused a ‘continual uncertainty’ with a ‘material impact upon businesses in Scotland’.
She added: ‘A further referendum would be no different.’ Sir Iain McMillan, ex-director of CBI Scotland, said: ‘A never-ending debate about Scotland’s position within the UK makes Scotland look, from the outside, politically unstable.’
Adam Marshall of the British Chambers of Commerce added: ‘Firms understandably fear that another drawn-out constitutional debate would divert both Holy- rood and Westminster away from delivering the best possible environment for business and growth.’
Theresa May warned the economic case for independence ‘simply does not add up’ in a speech to the Scottish Tory Party earlier this month. ‘There is no economic case for breaking up the United Kingdom, or of loosening the ties which bind us together,’ she said.