Economic Implications for the United Kingdom of Scottish Independence

By

Taha Mirza, Vatsal Solanki, Vaishali Kumar, Varuna Singh, Prathiba Sreshth

The Union

• Scotland and England united their parliaments in 1707 through Acts of Union.

• Scotland's economy needed help.

• The English still considered a semi-independent Scotland a security threat.

• 307 year old union.

Causes of Break• The privatization measures enacted by the conservative premier Margaret Thatcher laid

the keystone for Scottish Independence.

• Between 1976 and 1987 the nation lost nearly a third of its manufacturing capacity.

• The crisis left behind a legacy of social dislocation in many working class communities.

• Salmond positioned the SNP in the 1990s as a social democratic, European-friendly party that happened to also favor freedom from Britain.

• In 1999, it won greater devolution from London, which allowed the formation of a Scottish parliament

Economic Implication

• Natural resources like this are generally divided up by geography alone.

• The North Sea oil Fields 90% of oil revenue may go to Scotland.

• Scottish oil and gas exports were worth over £30 billion ($49 billion) in 2013.

• Alex Salmond, a former oil economist, has predicted that an additional 24 billion barrels of oil can still be recovered from the North Sea.

The Pound.

• An independent Scotland would keep the British pound as its currency –SNP.

• Scotland takes away significant assets which will be a blow to the pound value.

• Scotland will not carry the 1 Trillion pound of National Debt.

• Weaker currency will lead to increase in cost of imports, stoking inflation.

The Scotch Effect

• Scotch is big business in Scotland and highly regulated.

• There are only 109 distillery that are licensed to produce Scotch.

• Last year, Scottish whisky was a $6.9 billion dollar export business

• Making up 85 percent of the country’s total food and drink exports and 25 percent of the U.K.’s edible exports.

Military Spending

• UK will have spend 30 billion pounds to house its Nuclear Submarine Fleet.

• Defense spending will increase in order to compensate for loss of Military barracks, personnel, arms equipment.

• Also, Scotland has houses the ship-building yards for the UK. Which means UK will have to spend pounds to acquire ships.

• The secession will force UK, NATO and EU to review their alliance.

Markets

• Royal Bank of Scotland, Lloyds Group, Standard Life register themselves in London.

• London Stock Exchange and FTSE will fall if there is secession.

• LSE commodity market could see a rise in crude oil prices.

• Ratings agency have said that a breakup could lead to problems with the UK’s balance of payments

Sources• http://www.publications.parliament.uk/pa/ld201213/ldselect/ldeconaf/152/

15209.htm

• http://www.moneycontrol.com/news/world-news/from-whisky-to-house-prices-impactscottish-secession_1181611.html?utm_source=ref_article

• http://www.bbc.com/news/uk-scotland-scotland-politics-20042070

• http://live.reuters.com/Event/Scottish_referendum

• http://www.londonstockexchange.com/news/news/finance.htm

Questions?

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