Saturday 28th April
The Scottish economy could enjoy record growth if Scotland became independent, leaving the average Scot many thousands of pounds better off each year. This is the finding of a research Briefing Paper published today by the Adam Smith Institute, the free market economic think tank.
The paper, “Independent Scotland: The Road to Riches,” is by international economist Gabriel Stein of Lombard Street Research. It examines the comparative performance of Scotland and England, finding that from 1992-2004, Scotland’s gross value added grew at 4.7 percent, compared with a UK average of 5.4 percent, giving Scotland only 87 percent of the UK’s growth.
If an independent Scotland chose to follow the Republic of Ireland’s low-tax route, as SNP leader Alex Salmond has indicated it would, Scotland’s growth rate might be expected, over a five-year period, to move closer to Ireland’s trend growth rate of 7 percent. Given a further five years of Scottish growth at that trend level, and before diminishing returns set in, Scotland’s growth over the ten-year period would put its index 71.5 higher, more than a two-thirds increase in GDP.
By contrast, says Stein, the rest of the UK would be expected to have grown rather less, by just over a quarter. The result would be dramatic for Scotland. Measured in household income per head, Scotland, which started £1,700 behind the rest of the UK, could be expected to be £6,000 ahead of it at the end of that period.
The Adam Smith Institute says that the new research study shows just what can be achieved if countries choose to follow the low tax route to prosperity, a route which took the Republic of Ireland from the poorest country in the EU (per head) to the richest. Scotland, it says, could match that performance.