Dismissing GERS won’t persuade anyone to vote Yes
GERS day is upon us again which means the following will happen.
Half of Scotland’s chattering classes will jubilantly exclaim that Scotland would be a financial basket case if it was prised from the teat of mother England. The other half will rebut them by pointing out that GERS tells us nothing of the finances of an independent Scotland and that it only highlights the gross mismanagement of the Scottish economy by Westminster.
The problem for the independence supporting side of this annual ritual is that our argument plays into the hands of those who support the union.
Don’t get me wrong, our argument is factually correct, GERS is a flawed method of deducing the finances of an independent Scotland. Some, like Tax Professor Richard Murphy, even argue that it is a flawed method of working out Scotland’s financial position in the union.
It is also fair to say that the economy of Scotland has been historically mismanaged. A North Sea oil expert was doing that very thing this week. We recently highlighted the fact that Scotland would have run a surplus in the last 30 years had oil money not been used to subsidise the rest of the UK.
You can also point out that the UK economy is managed in such a way that it is disproportionately skewed towards London. As the ONS figures published last year show, if you take London and the South East out of the equation, Scotland’s deficit is normal for a UK region even after the oil price crash. Pretty much everywhere outside of the close environs of the City State of London is running a massive deficit.
Furthermore, we don’t know what share of assets and liabilities Scotland would end up with after we leave the UK and we don’t know what choices an independent Scotland might make. What we spend our money on and how we raise that money will have a big impact on our actual fiscal balance.
Finally, GERS doesn’t take into account the potential effect that Brexit will have on our finances. For instance, if we stay in the UK, most economists think Brexit will have a large negative impact. I have lost count of the number of reports showing this. Even the former head of the Department for Leaving the EU stated that Scotland will be one of the areas worst hit.
On the flip side of this, experts have highlighted the economic opportunity Scotland could reap if we voted for independence. We could attract those businesses that are now actively seeking to reduce their presence in the UK in order to stay in the European Single Market. Just this week it has been reported that many businesses are considering moving to Ireland.
However, GERS denying, as the Yoonatariat incorrectly labels it, is a poor strategy to win over No voters.
While the Scottish deficit only comes up once a year at the moment, if we do have a second indyref in the near future it will be one of the No sides biggest weapons. There will be mass media campaigns telling people just how risky a decision to leave the UK will be. Regardless of how inaccurate GERS may be in terms of predicting indy Scotland’s finances, many people are going to believe what they read and hear, and if we don’t tackle those perceptions we will come across like we are burying our heads in the sand.
Sure, the standard arguments above are good opening gambits, but we need to have something more robust to follow them up with. We need to be able to say, this is why you should be doubtful of the GERS figures but if an independent Scotland did start with a humungous deficit, here is what we would do to reduce it…………..
This is what Common Weal attempted to do in their Beyond GERS report published last year.
They concluded that we could reduce the potential GERS deficit by making the following changes.
They reckon that if the GERS deficit was accurate, then these methods alone could reduce Scotland’s deficit to a more manageable 3.5 percent of GDP which is lower than the UK figure. This is a better approach than just dismissing the figures because they are not going to go away. The ideas suggested by Common Weal are not the only solutions, there are many levers we could tweak to increase income and there are many spending choices we could make to decrease outgoings.
So while a healthy dose of scepticism is justified with regards to GERS. It would be better to combine that with a positive case for what we could do if our scepticism is misplaced.
You do hear time and time again from No voters that many just weren’t sufficiently convinced by the plan of 2014. The deficit is one of the key areas, along with pensions, currency and trade that we have to get right next time. The best way to do that is to understand the fear preventing others from joining us and to offer plausible solutions to those fears.
Telling them they are wrong to be wary of the cost of independence just won’t work, even if there is some truth to that statement.
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