Nicola Sturgeon’s new Scottish independence paper – the key points
Nicola Sturgeon has published her long-awaited prospectus paper for Scottish independence covering economic and currency issues.
The third paper in the Building a New Scotland series aims to answer many “big” questions around the economy of an independent Scotland.
It contains the most detail so far of any Scottish Government publication on how an independent Scotland would operate, aiming to refresh the case made ahead of the 2014 referendum.
Opponents of independence have said it fails to address many of the concerns around the economic impact of independence, while the First Minister said a “stronger, fairer and more sustainable” economy is not possible under Westminster.
Here are some of the key points:
The Scottish Government proposes to continue using sterling for a period after independence as it transitions to a new Scottish pound.
It says this will take place “as soon as practicable through a careful, managed and responsible transition, guided by criteria and economic conditions rather than a fixed timetable”.
Speaking to journalists at Bute House, the First Minister was pressed on how long she expected this transition period to be, but declined to put a number on how many years it would take.
She argued that doing so would be irresponsible as it could lead to the change taking place at a time which was not ideal for the economy.
Under her plan, a Scottish Central Bank would be established after the vote for independence.
It would report on economic conditions and “build credibility” following independence, with the Scottish Parliament making the final decision on when to move to the new currency.
When this is introduced, borrowing would be used to secure additional foreign exchange reserves.
The introduction of the Scottish pound is not intended to prevent sterling or other currencies being used.
– Scotland’s finances
The First Minister was questioned on the gap between Scotland’s government spending and its tax income being higher than the UK average.
The paper says it is not possible to make an assessment of Scotland’s fiscal position at the point of independence.
However, it says credible fiscal rules will be “essential” for a newly independent Scotland.
These rules would be set out ahead of Scotland becoming independent, taking into account any changes in the EU Stability and Growth Pact.
The document does not set figures for the size of an independent Scotland’s intended deficit, but says “austerity” measures should be rejected.
It says Scotland would take on a fair share of the UK’s debt payments via an annual “solidarity payment” – a concept used by the economist Andrew Wilson in his 2018 Growth Commission paper for the SNP.
– Financial institutions
As well as the Scottish Central Bank, a Debt Management Office would be created to manage cash requirements from day one of independence.
Reserves for these organisations would need to be set up well in advance of independence and would sit outside the normal fiscal rules, the paper says.
It proposes an expanded role for the Scottish Fiscal Commission, which would provide forecasts and independent analysis of progress towards the fiscal targets.
– Borders and the EU
The paper stresses the economic benefits of removing trade barriers as an independent Scotland rejoins the EU.
It says this would boost trade with the EU as well as the rest of the world, as well as allowing free travel around the 27 member states.
Free travel around the UK and Ireland is guaranteed under the Common Travel Area arrangement.
Because the UK is no longer in the EU, the paper says there would be checks on goods moving between Scotland and England.
The document says: “The Scottish Government would put in place measures to smooth any checks required as a result of Brexit on goods moving to and from England and Wales.”
The prospectus paper says Scotland’s vast renewable energy resources would form the “bedrock” of its post-independence economy.
Over the long term, it says a de-carbonised economy will provide cheaper energy to households and businesses.
It says: “An independent Scotland would design the electricity market: either as an equal partner in a joint design authority with the UK Government, or under a different system.”
This would “break the link” between the price of electricity and the price of gas, it claimed.
A future paper in the series is intended to give more detail on how an independent Scotland would deliver on the potential of its net-zero ambitions.
– Oil and the North SeaThe recent spike in energy prices means this year’s oil and gas revenues are forecast to be about £10 billion higher than was forecast in January.
However, the paper says oil production is expected to decline later in the decade.
It says this “suggests that the peak of the forecast revenues, while still making a significant contribution, would have passed before an independent Scotland began to make its own fiscal policy”.
The paper therefore proposes keeping oil and gas revenues separate from day-to-day government spending.
Instead, this money would go towards a “Building a New Scotland” fund which would contribute £20 billion in capital spending over the first decade of Scottish independence.
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