The economic debate about Scottish independence focusses too much on where we are now, rather than where we will be with or without independence. The answer to where we are now is a simple one. Our GDP per capita is around 11% higher than that of the UK as a whole. On day one, the average Scottish person will be richer than they are now. The question is what happens next. For the next few points of my 40 arguments for Scottish independence, I look at the likely economic impacts of a yes or a no vote.
12) last chance to escape the London Housing bubble...
“London living through biggest house price bubble ever” - the Evening Standard, March, 2014
I have never understood those who fear the change of independence but don't fear what seems to me to be the very obvious change that will come if we stay in the union – the economic collapse when the housing bubble bursts. London house prices grew by 18.2% last year. Those in Scotland grew by 7.6%. Scottish houses are the least expensive of anywhere in the UK but Northern Ireland and the North of England – both significantly poorer areas. We have the lowest cost of housing compared to incomes - in other words, the most affordable housing, of any of the nations of the UK. That's despite the fact that Scotland is the richest area of the UK outside London and the South East.
What does all this tell us? Well, first, London is re-inflating its housing bubble. This is now pretty universally acknowledged. In fact, it's expanded beyond London. As Professor James Mitchell of Warwick University points out, “only Northern Ireland, Scotland and, to a lesser degree, the East of England are not in the grip of a house price bubble”. The thing about bubbles is this: they burst. And when they do, you generally want to be as far away as possible.
Scotland will always be attached to England. Our economies will always be interconnected to an extent, and that bursting bubble will certainly hit us a bit. But getting metaphorically as far away as fast as possible would be very sensible indeed. Perhaps more importantly, what the figures tell us is that Scotland is very well placed to begin leading the way in these isles towards a different kind of economy, not dependent on a house-price roller coaster to nowhere.
This doesn't mean we can be complacent. Homeowners in the middle of the bubble clamour for government policies to keep their house prices going up and up, ignoring what the increase in altitude means for the violence of the inevitable fall. Without independence, these policies will often affect Scotland too, risking sucking us further into this terrifying economic vortex. To properly escape its pull, we need all the powers we can get our hands on, and, frankly, we need them as fast as possible.
13) ...and the London hoover
The flip side of the housing bubble, talked about much less, is where it's sucking wealth from. Every pound invested in buying houses is a pound not invested in new technology, in renewables factories, in inventing things, in developing medicines, in training people in new skills, even in building new houses. If you use your money to make old houses more expensive, you're not using it to build the economy you'll need tomorrow. Sucking wealth away from productive investment is how you kill an economy. In part, it's how the British economy is being killed as London hoovers up money from all over the UK and pumps it into an ever growing balloon.
Giving Scotland the macro-economic powers to try to do something about this would mean new industries and new jobs for Scots. It would mean we could build an economy fit for the 21t century. But it wouldn't just be good for us, it would give us a chance to help re-balance the economy across all of these islands.
14) Britain isn't investing anything in its future
“The result of these easy-to-check calculations is that our net investment per head of the population is as close to zero as makes no difference” - John Mills
In fact, it's worse than point 13 would imply. As the economist and businessman John Mills has shown, the level of UK investment in the future is dismal. "Of a total of 154 countries surveyed" says Mills, "the UK ranked number 142 equal - with El Salvador". When you take into account the deterioration of assets (machines getting old and things) and population increase, the UK is investing a net figure of zilch in its future economy. Nada. Zero. Nothing. After inflating its economy through consumer debt, nothing's been put aside to build tomorrow.
Of course, what this doesn't take into account is broader social investment – things like education which is, arguably, the most important investment you can make. So, here for example is a map from Universities UK showing how UK public sector investment in Higher Education as a portion of GDP compares with various countries around the world.
Yup. That's right. As well as investing nothing in the traditional things you'd think of as its economy, Britain invests less in educating its young than almost any other developed country.
Could we guarantee Scotland would be different? No. But we can be sure of this: a country which is building nothing for its future is not one which is stable. Add up all of the fear-mongering claims from Better Together (apart maybe from the risk of space attack) and together, they aren't anything like as scary as this. The referendum is not a choice between risk and stability. The alternative to leading the way along a different path is falling off a cliff.
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