Tuesday, 25th May 2010
SNP would turn Scotland into economic basket-case
The SNP’s “infantile” economic policies would leave an independent Scotland in the same state as Greece, Scottish Conservative MEP Struan Stevenson has warned.
Recent weeks have seen the sovereign debt crisis and internal political tensions threaten to tear the single currency apart. World markets have plummeted over fears that some euro countries will default on their debt repayments, while a knee-jerk ban on ‘naked’ short selling by Germany last week panicked investors further.
But under the SNP’s plans for an independent Scotland within the EU, the country would be forced to adopt the euro as a condition of membership. This means it would also have to meet tough rules on its budget deficit set out by the European Central Bank in Frankfurt.
With Scotland likely to inherit a huge budget deficit, this would mean swingeing cuts in public services as seen recently in Greece and Spain.
Mr Stevenson said:
“The crises of recent years have made a mockery of the SNP’s infantile economic policies.
“First we had the near-collapse of RBS and Bank of Scotland which was only prevented by a bailout equivalent to three times’ Scotland’s annual GDP. Together with volatile oil and gas prices, the SNP’s fantasy of an economy built on fuel and finance was shattered.
“More recently, we’ve seen the turmoil in the Eurozone created by excessive government debt in countries like Greece, Spain and Portugal.
“The EU demands that every new Member State adopts the single currency as a condition of membership, so Scotland would be forced to ditch the pound and join the euro straightjacket.
“National Audit Office data has shown that even with the revenue from North Sea oil and gas, Scotland would have had a budget deficit every year since 1988-9, totalling around £20bn, which alone would have equated to 14% of Scotland’s GDP. And that figure doesn’t include the share of UK debts Scotland would inherit if it broke away.
“Together with a bloated public sector and an SNP government addicted to state spending, an independent Scotland would join the other economic basket-cases of Europe forced to slash spending in an effort to stave off bankruptcy.”
The cost of bailing out RBS and Bank of Scotland has been estimated to total £470billion by the Scottish Parliament Information Centre (SPICe).
In giving evidence to MSPs during a Holyrood inquiry into the banking collapse, researchers from SPICe said that, based on figures published by the National Audit Office, £70 billion had been spent on the government’s shareholding in the two banks.
They estimated that the banks had received a further £100 billion in the Special Liquidity Scheme, £100 billion in the Credit Guarantee Scheme and RBS was benefiting from up to £200 billion in the Asset Protection Scheme. This £470 billion total, the analysts said, was more than three times the £144billion of Scottish GDP in 2008.
The Scotland Office paper, Scotland and Oil, published in June 2009, showed that if all North Sea oil revenues had been allocated to Scotland there would only have been 9 years out of the last 27 when Scotland’s finances would have been in surplus. Including all North Sea oil revenues the last year of surplus was in 1988-89 and since then there has been 18 years of annual deficits with Scotland’s spending being greater than the tax raised in Scotland.
