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Scotland's Independence Vote Could Shake Up Industry
dcblogs writes: Scotland is not a major high-tech employment center, but it has good universities and entrepreneurial energy. About 70,000 people work in tech out of a total workforce of about 2.5 million, or about 3%. By contrast, financial services accounts for about 15% of employment in Scotland. But passions are high. "Honest, I've never been so scared in my life," said Euan Mackenzie about the prospect of separating from the U.K. He runs a 16-employee start-up, 1partCarbon, in Edinburgh, a platform that builds medical systems. "For tech start-ups, funding will be tougher to find and more expensive, there will be no local banks, access to EU markets and the freedom of movement will be curtailed," said Mackenzie. "As someone who enjoys risk and new opportunities, my company will remain in Scotland and make the best of whichever side prevails on Thursday, but the effect of independence on tech start-ups and the whole Scottish economy will be cataclysmic," he said.
look on the bright side
who needs money when you can rid yourself of nuclear weapons?
A lot of "yes" campaigners seem to have been sold on the idea that any warning of economic doom upon a "yes" vote is scaremongering, bullying, or "undermining the Scottish democratic process." Bullshit. Many intelligent people looking at this from a rational perspective have concluded that the "sweet spot" for Scotland is staying in the union and having devo-max; basically getting it both ways, with lots of self-government combined with a net financial income from the rest of the UK, as well as obviously ease of trade.
However, the pro-independence SNP are 100% blinkered on independence, at any cost. They will therefore paint warnings like this as lies designed purely to scupper their frankly loony picture of a prosperous independent Scotland, and a lot of Scots buy into it. Shame, really.
Americans might look on with bemusement; I can understand that. I guess it's a bit like Florida choosing to break away from the US, having a pro-Florida political party endlessly demonizing "them" (the rest of the US) as causing pretty much every economic and political woe Florida has going for it. As an English guy, I think this whole situation really sucks. If the UK breaks up, the whole of Britain will be worse off for it, but I suspect Scotland will take the bigger brunt of the pain. And given that it will have made the decision, it will deserve to.
== Jez ==
Do you miss Firefox? Try Pale Moon.
Ahhh, so the one-sided emotional campaigning ("Think of the ch... checkbook!") has made it to /. too.
Free, as in your money being freed from the confines of your account.
They say that if they default on British debt obligations (as they say they will if they don't get "fair share" of Bank of England assets), they can still secure loans from the continent. It is unlikely that anyone in Europe will spite UK this way, and there is no way Brussels is going to take another debt-laden country. Without admittance to the EU, they're going to find it hard to secure the financing and trade deals they're going to need to make this work. This is a case of optimism and boredom triumphing over reason.
Plus, you can be sure that large numbers of the English buying public will boycott your products, just because. #scotfree
Fine, if Scotland becomes independent again, the French will buy all the Scotch whisky they can get their hand on!
On a more personal note: "Votez 'Oui', amis écossais ! Juste pour emmerder les Anglais !". The Auld Alliance shall rise again! ;-)
The right to offend is far more important than the right not to be offended. (Rowan Atkinson)
The yes campaign is telling people they can keep the pound and join Europe. Not gonna happen, it isn't for Scotland to decide. 28 countries have to decide they are totally cool with a bit of the UK splitting off and joining Europe. That means 28 countries have to want to set a precident for bits of themselves splitting off, declaring independence and joining Europe. They have to also decide that they are totally cool on Scotland having an opt out on the Euro that nobody else apart from the UK has and nobody else likes.
The rest of the UK doesn't particularly want a currency union with Scotland, and it wouldn't be popular with the Eurozone countries to have a more formal sterling zone (they don't care about the small overseas territories, but a second full size country in a currency union would be a big deal).
The No campaign says independence would be bad for Scotland and bad for the rest of the UK and everyone else.
The Yes campaign says independence would be good for Scotland and bad for the rest of the UK and everyone else.
They both agree that independence would be a massive pain in the arse for everyone outside of Scotland, and they are 50:50 on how much of a complete and utter pointless pain in the arse it will be within Scotland.
Its not the Bank of Englands assets that Salmond wants, its the Bank of England itself. He wants to be able to retain the BoE as a lender of last resort, while maintaining a say in how Sterling fiscal policy is created - inflation controls, interest rates, ability to borrow at a base rate etc etc etc.
Without the BoE, Scotland would need to set up its own lender of last resort, or risk having less foreign investment as Scottish banks have to borrow on the standard market, which is a lot more expensive.
There is no positive to the rest of the UK to allow an independent Scotland to continue to have access to the BoE in the capacity it wants to, which is why the Westminster government parties have all ruled it out - Salmond mean while continually pushes the fact that "Ireland was allowed to have a currency union with the UK when it was granted independence in the 1920s" but ignores the fact that the Republic of Ireland did not actually have a currency union as it had no say in fiscal policy in the few short years where it actually used Sterling as its currency, it simply just used Sterling like any person on the street does. Then they pegged the Irish Pound to Sterling for the next 50 or so years, again with minimal fiscal decision making as a result.
Salmonds other argument is that Scotland cannot be held liable for any debt that the rest of the UK has already acknowledged responsibility for, which Westminster did the first time Salmond made his threat because any doubt over that would cause fiscal policy difficulties with foreign markets - but that doesn't mean foreign lenders cannot view Scotland as a higher risk as a result, because it is after all refusing to take a portion of the debt it helped create.
Whatever happens, Friday is going to be very very interesting - if its a "Yes" then Salmond starts making his demands and then runs into difficulties where he insisted there wouldn't be any (currency union, which he has insisted all along would happen, despite being told time and again that it wouldn't, and membership of the EU, which Salmond has again insisted would be nearly instant while major EU politicians and leaders have said a newly independent Scotland would be required to apply to join as a new member state, the same as any other new member state seeking membership).
If its a "No", Salmond won't back down but will probably use it to fuel more dissent toward Westminster, insisting on another referendum in the near future.
Ho hum, the weekend is going to be fun.
That's all well and good, but Kickstarter campaigns, banks, and EU membership don't happen overnight. I imagine that the interviewee is thinking about his business situation twelve months from now, not four years down the road.
No kidding!!! What do you say at this point?
I know essentially nothing of the subject but that won't stop me from giving my opinion.
The benefits of independence are social/cultural/emotional while the benefits of staying together are practical/economical.
I believe they should just stay while using the current situation to get more "practical independence", i.e.: more control over the union's government, taxing and expenses.
Charlie Stross recently posted a very good take on this: This is a permanent change. Whatever happens during the first few years is basically irrelevant, compared to the long-term results. Did Norway separating from Sweden cause short-term economic upheaval? Does that matter at all a century later?
This is a long-term change, not a short.term one. Any voter should consider the probable situation twenty or fourty years from now, not whatever happens in a year or two.
Trust the Computer. The Computer is your friend.
Ah yes, but you forget a couple of things here...
First of all, Scotland would be one of two EU nations to produce its own oil and gaz (the other is Norway). That gives it A LOT of leverage, especially since they can't possibly burn all that fuel in Scotland itself.
After the initial shock, you can bet dozens of countries (China? Japan? others?) would send delegations to Scotland to finance pretty much everything they want, provided they get a piece of the North Sea action (so to speak).
Second, there is a very common doctrine in newly-formed nations to refuse to honor all debts contracted in their names before independence. Hence, whatever debt the UK had, Scotland can now refuse, since it is now independent. That would blow the whole of the City of London to smithereens (which is a very good reason to vote Yes if you happen to be a Scot).
Combine the two, and you have a newly independent country, with zero debts and very interesting natural resources. Give it a little time, and investors from all over the world would beat a path to Scotland's door, checkbooks in hand.
Sure, the economic transition would be quite difficult, especially if the SNP persists in its own silly plan of keeping the Queen, keeping the pound (soooo stupid this one!) and applying for EU membership, but Scotland has a lot going for it.
Whether it can avoid the natural ressource trap is something else again, of course...
The right to offend is far more important than the right not to be offended. (Rowan Atkinson)
I think it would be fairly cynical of the English side to allow a vote on independence and then screw over Scotland as an 'I told you so'. The best thing for everyone would be to facilitate a peaceful and mutually beneficial transition. That means cooperating with the Bank of Scotland to keep the Pound if they want to and doing nothing to make EU membership difficult. This isn't some sort of armed rebellion. The UK agreed to this vote. If the remaining UK screws over Scotland out of regret for allowing independence, then it would hurt the UK just as much as it would Scotland.
I rather think they would. Banks are not known for national alliances trumping profits, assuming lenders care one way or another (they don't).
Scotland will find it very hard to raise the funding it needs in the markets if it goes independent, but that'll be because Salmond seems to think walking away from their share of the UK debt is a viable option at all. I expect that if they did that, they could tell lenders that was a one off and they fully intend to repay debts accumulated by the new country, and I expect that lenders would buy it (after all HMG will still pay off the old Scottish debt).
But if they are actually stupid enough to do that they'll have made an enemy of an economy much larger than theirs, their largest export market, a country they're heavily dependent on for the basic infrastructure of running a government and a country that could veto their entry into Europe. Scotland really does NOT want a nasty, vicious divorce from the UK, but Salmond doesn't appear to be thinking that far ahead.
Additionally, raising funds would be tough because a significant part of the yes campaign appears to be predicated on the belief that post-independence Scotland will veer hard to the left. In the 1970's the north of the UK was practically communist and it appears many there still hanker for those times. A half-country that just pissed off its most important partner and is determined to re-run the Soviet experiment is not gonna be a good credit risk no matter what national allegiances one may have.
A lot of people think that Scotland is walking blindly towards independence without knowing what they're doing. I'd like to remind them that Scotland has voted for independence twice before but both times it's been blocked. In 1914 Scotland voted for independence from the UK, but then the First World War started and it was conveniently dropped. In 1979 Scotland voted again for much more local power through devolution, but some dodgy rule dictated that at least 40% of the total registered electorate had to vote for devolution, and even though they got the majority winning by 51.62% Yes to 48.38% No the vote was overturned because the Yes vote comprised only 32.9% of the total possible vote. So this has been a long time coming.
But I do have very distant Scottish ancestry.
I would support and 'Aye" vote. For too long the English have ruled over Scotland after beating the Jacobites at Culloden.
If they can't use the Pound after independence, they should switch to the Kilogram - its worth 2.2 times as much.
Probably not, but it's hardly a surprise that people who were practically Marxist guerillas didn't fully think through what they were doing.
Post independence Ireland's economy went down the shitter for a loooooong time and lots of people were very miserable. Emigration was rampant and Ireland became a place supported by remittances, like a third world country. It wasn't until they modernised their economy that things started to improve.
This is like saying someone MUST divorce their spouse because they can always just get back together. I think you'll find this campaign has huge potential to wreck relations between Scotland and the rest of the UK. In the short run it won't just make Scotland poorer, it'll hurt everyone. Not to mention that the most common justification for independence can be summed up as "the English are nasty and unfair and everything wrong with Scotland is their fault".
With respect to trade, unfortunately the independence negotiations could be very complicated and nasty if they vote yes, as Salmond has promised the moon including things he knows he can't get. When he's told - again - he won't be able to get the things he wants, he'll once again blame the English and start trying to make the breakup as nasty as he can to try and save face. A trade war or widespread unofficial boycotts are not exactly unthinkable.
Heck, I wasn't planning on going on vacation to Scotland any time soon but I wouldn't have been against the idea. But after watching all of this?? Why would I go somewhere where apparently 50% of the population are quasi-Marxists who think all English people suck?
"First of all, Scotland would be one of two EU nations to produce its own oil and gaz (the other is Norway)."
I've seen this so many times on the internet. Norway is NOT a member of the European Union.
So, the inrush of global partners wouldn't happen. More to the point, why would they rush to jump into bed with a government that has already stood up and said it is seriously considering reneging on UK debt? Which, by the way, is not the norm for newly independent countries and would be remembered by the markets. If they lent at all, they would certainly require paying for it. You really want to pay Greek interest rates on your government debt?
Think Venezuela, not Norway.
[FUCK BETA]
Naw - there was a bill before Parliament that disappeared when war started, but no vote, unless you can provide me with evidence to the contrary
Of course.
That would mean agreeing to underwrite and subsidise someone else's heavily socialist spending policies in perpetuity. The English taxpayer already suffers from paying tax that is then shipped to Scotland and used to give Scottish and rest-of-EU students free education, but not English students. There is no way in hell they will agree to crippling tax rises to fund a country that just told them to shove it. And this was made clear to Scotland throughout the campaign.
Once that happens, Salmond will argue that being told to fund his own policies is "English bullying" just like he's done throughout the campaign, and this terrible bullying is a reason to refuse to take on any debt. This will immediately alienate all English voters even moreso than Salmond already has done.
The UK will then have multiple ways to respond, because it's in a much stronger negotiating position; it's a much larger economy and already has all the infrastructure a country needs, whereas Scotland doesn't. As a trivial example, Scotland would be dependent on London to administer welfare until it's managed to commission and build its own IT systems. Does it want a smooth transition there? OK, time to go to the markets and borrow the funds to pay the UK for those services. There are many other examples like that.
"There are and will continue to be plenty of banks in Scotland."
In order for banks to lend, they must have deposits. Given the risk of holding money north of the border, a 'Yes' vote will generate a stampede of cash south on Friday. There may be banks, but they won't have any money to lend
"There is and will continue to be freedom of movement".
Really? If Scotland has left the EU, then it will be necessary to impose border controls
"There is and will continue to be access to European markets."
Only if you get to renegotiate membership of the EU. Good luck with that until you've agreed to pay your share of the UK's debts, and then only if you are nice to the Spanish
"Scotland has and will continue to use The Pound, and there is nothing the UK government will be able to do to stop them."
Sterlingisation will result in substantially higher interest rates for all bank loans as the risk of holding money in a country without a lender of last resort is significant.
"Prices are will remain competitive; arbitrage and competitive pressures will prevent large price rises."
This, at least, is accurate because you admit there will be price rises. If you are very lucky there won't be a toll on the M6 north of Carlise and the A1 north of Berwick, but it would certainly be rational for us to impose one to pay for the cost of maintaining roads to enable good to travel to and from Scotland.
"Russia will NOT invade Scotland... FFS! Why do I have to comment on this kind of purile shit?"
Given Putin's ambition and Scotland's oil, an attempt seems like an entertaining prospect. Not a visible invasion at first of course; Scottish socialists would start rioting as a result of the economic chaos following Scotland's ejection from the EU and then invite Russian peacekeepers to restore order. A referendum would be organised for Scotland to join the Russian Federation.
Of course that's not likely - but the idea that Scotland should become freeloaders like many other European countries, dependent on Uncle Sam to protect them from a bear that is demonstrably on the prowl is disappointing.
Yes, because of course no bank would ever want to be in a new country with an educated workforce, low unemployment, and lots of natural resources! Small places like Luxembourg and Switzerland are absolutely barren, devoid of banks, money, or access to markets! The poor people of Liechtenstein and Monaco are starving and barely literate! Don't turn Scotland into a dump like Norway!
(That was sarcasm, for the sarcasm-impaired.)
I don't really understand the political or economic motivations of Scottish independence.
The political side would make more sense if Scotland was greatly different than UK culturally and had a significant short-term history of English subjugation. The Scots really aren't an ethnic or racial grouping, except at some micro level and don't seem to have a serious complaint regarding discrimination on language or religious grounds.
The economics make less sense -- Scotland has been economically integrated with the larger UK for a long time. Had Scotland split off in 1850, it would have been at a time when economies were smaller and much more locally self sufficient and it would have had time to develop into something that The economy seems much more regional now and it will be a hard transition to a more standalone economy.
You're mixing up currency and currency union. Salmond has been deliberately obfuscating this so the confusion is not surprising, but they are different things.
Post independence Scotland could continue to use the pieces of metal and paper we tend to think of as "the pound". It could still express prices in pounds. The UK cannot stop this nor would it care to do so, even if it could. Scotland can keep the currency.
Currency union is an entirely different matter. Currency union is about decision making and who pays for what in future should things go tits up again. This is not a physical object or landmass that can be split up. It's called a "union" because it involves people working together. This is categorically not on offer because Scotland has shown no preference for economic policies compatible with the rest of the UK, really it's shown the exact opposite. So English people working together with Scottish people to create unified economic policies on this wouldn't really be possible, the disagreements are too deep and English people outnumber Scottish quite significantly. Thus it'd only make sense if Scotland agreed to give up most of the independence it had just won. Otherwise it'd be Greece all over again. Profligate teenager wouldn't even begin to describe it.
There is one situation in which CU could actually make sense - if Scotland strongly and consistently voted for the same economic policies as the UK had, and could be trusted to do so for the forseeable future. However this isn't a Scotland that anyone has been seeing during the independence campaign, so it's hard to imagine things changing anytime soon.
With respect to the debt, I think in the event of independence all the opinion polls suggest the UK will take a firm line. No currency union and they split the debt equally too. It's not up for debate. This is actually a fair position - split the debts and financially each goes their own way - but I doubt Scotland will go for it, and the amount of pain that could result for both sides is quite astronomical. This is why such a large proportion of people don't think independence is worth it.
The UK can't refuse to have a currency union in practice. It might go as far as the European courts or other international bodies, but the currency is basically as much theirs as it is the rest of the UK's.
Actually the rUK can refuse a currency union, and it will - there is nothing stopping it, and no foreign court has jurisdiction here. There is nothing stopping Scotland from *using* Sterling as its currency, but that's not what's being discussed here as I said in my earlier post - Salmond wants a seat at the table when it comes to Sterling fiscal policy, while none of the Westminster parties want to sit next to him, because they do not want to be beholden to a second economy when setting fiscal policy for the rUK.
That's what this discussion is all about. Why should Westminster have to share fiscal decision making with an "independent" Scotland?
Go ahead and use Sterling as the thing you use to buy and sell things - but you aren't getting a seat at the Bank of England table.
Infact, Salmond could quite easily take the entirety of the Bank of England and Sterling with him, but that won't solve his issue - it doesn't get him a stable currency because the Bank of England will no longer be backed by the Westminster treasury, and as the Bank of Englands assets would still be sliced up as before, he wouldn't get any more money with which to base his lender of last resort on.
What Salmond is after when he says "I want a currency union" is actually "I want a backing lender that I can rely on to bail me out regardless, but I don't want to set up my own backing lender because that is costly and would mean I would have to renege on my taxation promises, and anyway said new backing lender would not have the standing on the international financial markets because of its lack of history and backing of an established economic policy and government treasury, so what I actually need is a backing lender linked to the Westminster government. Crap."
Problem is, the voters don't understand the complexities of all that and simply believe Salmond...
If the vote is yes then the rest of the UK will negotiate a union because it's in their best interests. Otherwise investors are going to start pulling out of the UK fast because if Scotland doesn't keep Sterling the rest of the UK's debt will increase massively in proportion. Sterling would also lose many of the assets it is valued against, like North Sea oil.
Investors aren't going to go anywhere, because the financial worth of the City of London far outweighs the potential revenue of the north sea oil - don't get me wrong, that oil revenue is a nice to have, but it won't break the rUK not to have it. The bulk of the GDP of the UK resides outside Scotland, so we aren't in anywhere near as much of a sticky place as you think we are, especially as most large Scottish financial institutes will have to move south of the border to satisfy EU and WTO regulations.
Sharing fiscal policy with a brand new government, one that has to find its legs, sort out internal taxation, find the balance of its people etc - thats not something we want as a country, because all that brings uncertainty and instability. Salmond can have all of that, we will just get on with our own fiscal responsibilities thanks.
I also don't see how the rUKs debt will "increase massively in proportion" - if Salmond tries to make good on his threat of not taking Scotlands portion of the national debt, then the fledgling Scottish treasury will have a fairly poor international credit rating, right at the time it needs to be borrowing in order to set up its central bank.
Don't fall into the trap of believing Salmond and his supporters when they link a currency union to debt - a countries debt is not linked to the currency that country uses, its an entirely separate thing. It might be denominated in that currency for the purposes of reporting, but it isn't linked to it - it doesn't magically go away if the UK stopped using Sterling, and it doesn't mean that Salmond can legitimately refuse to take the Scottish share of debt without a currency union.