SCOTTISH INDEPENDENCE CAMPAIGN

Scotland's First Minister Salmond, leader of his campaign for independence, when talking most confidentlly about future higher per capita income for all, he caveats his statements with the words "according to official figures", or similar phrases, because he, an ex-economist, knows that official estimates are no more than merely crude estimates. Scotland economy data is based on % UK population. It is not empirically calculated, only flexed slightly for a larger regional % of old people and fewer children, thereby giving Scotland a 'regional' per capita GDP above the UK national GDP per capita figure.The idea of Scotland being 'wealthier' or 'richer' than the UK is a mere figment derived from artificial calculations. Mr Salmond also knows that if recalculated for external trade, according to official government analyses, Scotland's National Income falls by at least one seventh. He also knows that half of Scotland's tax revenues cannot be captured within its borders, and that with capital flight and disinvestment both Scotland's output and government revenues will shrink. This is why retaining £sterling is so vital. Without that there is no prospect of avoiding having to finance a very large balance of payments deficit, especially with the rest of the UK, not even with the addition of Scotland's share of North Sea oil & Gas output, trade and tax revenue, and also to avoid needing a foreign currency reserve of about 25% ratio to GDP, according to the Bank of England. His Finance Minister, John Swinney, will be equally aware of these realities. Both politicians know full well that Scotland's financial services sector has no practical economic choice but to relocate to England, a very large hole in the hull of Scotland's National Income and tax-base. Yet, both Salmond and Swinney are unrestrained in their rhetoric, pushing an absurdly bullish macroeconomic forecast. Their selective gaming of economic facts is only matched by the astonishing willingness of what looks like half Scotland's voters to believe in politicians' prediction? That voters anywhere today should gamble so hugely on politicians' assurances is amazing, doubly so in Scotland, a country with a reputation hitherto for canniness and caution, the financial mess of its major banks notwithstanding. The nationalist politicians know they are misrepresenting macroeconomic facts and risking years of deep recession. They are cosseted in this enormous irresponsibility only by a sizable % of febrile nationalist voters prepared to pay any price for historic sovereignty. If Mr Salmond's assurances were a public company's investment prospectus or AGM statement, both would breach company law and become liable to future class actions. The independence campaign has ignored, or enormously discounted, the costs and risks of sovereignty that include massive falls in both government revenue and national income, necessitating deep spending cuts and other austerity measures to reduce the external deficits, triggering years of deep recession likely to take at least a generation (20-30 years) to recover from. This is not merely the political and economic costs of 'uncertainty', but a future cash-flow certainty. There is a warning in this too for UK voters when considering leaving the EU. Scotland is a far smaller part of the UK economy than the UK is of the EU. It is no more in the interest of the rest of the EU than it is for the rest of the UK to make leaving either costless or painless.