Thread by @ChrisGiles_

This is the story of the rising price of identity politics. It’s not about the viability of an independent Scotland.

Obviously it’s viable, if people want to pay (like Brexit) but the price has gone up

Why?

1/ on.ft.com/2OmVYFi

The chart shows the moving parts
- oil (worth next to nothing now)
- worsening Scottish revenues
- no longer any U.K. fiscal consolidation planned, so Scotland can’t assume the U.K. will do it’s fiscal dirty work for it any more

2/

Since the SNP commissioned 2018 sustainable growth commission, the fiscal gap needed to be filled has doubled from 2.9% of GDP to 5.7%

Note: this uses all of the SNP’s standard assumptions, which would be challenged by London in independence negotiations

3/

- It includes the lower debt service bills that are expected (London’s already spent that)

- It assumes no long term additional public spending for Covid legacy (unlikely)

-it assumes Scotland could save 1.2% of GDP on defence cuts and other shared services (eg research)

4/

- To have credible public finances the SNP would need a tax raising plan or proposals for a lot of public spending restraint

With those, it could easily be viable and borrow in the interim

If its economy could grow faster with independence, the choices would be easier

5/

That is true of all economies everywhere. It took Ireland about 60 years to find a growth model that was, and is, fantastically successful out of the U.K.

So, it’s possible.

Brexit makes it harder though, because it imposes border costs that stifle growth

6/

This is the first in a @FinancialTimes series on the disunited U.K. , published over the next few days

ENDS