ON a macroeconomic level, independence for Scotland in 2014 would have resulted in the same outcome as staying in the Union. Right now, we would be experiencing a period of austerity.

When an economist makes a statement, it is framed within their worldview, which sits atop a set of assumptions. They use relevant data and evidence, which may or may not include an economic model. The information is then filtered through their own biases – what data to select, for example – and tailored for their intended audience. These filters conspire to lead to an economic prediction.

Rarely do we have the opportunity to understand the details that affect an economist's point of view. We just hear the headlines: “Economic growth forecast to grow” or “New Scottish currency forecast to be worth more than Sterling”, etc. So consider this when I detail my “prediction” that our macroeconomy in 2024 would have been in a very similar state if we had exited the Union.

(Image: Getty)

Economic performance is typically judged using GDP, unemployment, inflation, the balance of trade, interest rates, government debt, productivity, levels of investment and exchange rates. I make the case that these would all be the same in Scotland in 2024 with independence. I discussed this with Kairin van Sweeden and Richard Murphy, who believed independence would transform the Scottish economy. I was much more glum. And here’s how I got there.

My worldview is that capitalism is designed to enrich a small percentage of the population by taking most of the value from the transformation of natural resources. It is profoundly unjust and undemocratic, and alternative systems would allocate resources more efficiently, effectively and justly. Capitalism in its current form is killing people and the planet, and unless a new economic system is created, it will lead to our extinction.

The assumptions on which I make my “we’d be no better off in macroeconomic terms” are as follows.

Scotland is a medium-sized European economy contributing 0.25% of the global GDP. It, therefore, is a “taker” regarding macroeconomic factors like GDP growth and inflation. Scotland’s GDP tracks almost 1:1 with the rest of the UK. So, there are very few things we can or would have done in that decade to change the “global or regional” impact on our macro economy. The war in Ukraine (below) would still have caused inflation in Scotland, independent or not. A global recession would mean our economy would slow. These are stuck.

This leads me to take what I think is a realistic view of the impact of independence. Secondly, I believe that the overarching economic paradigm that we have today as part of the UK would have been in place in an independent Scotland since 2014 – maybe with some minor tweaking but with little macroeconomic impact.

My specific assumption is that a buoyant “winning” SNP would have won the subsequent election (let’s say in 2016), and their “steady as she goes” vision – outlined before the referendum and updated in 2018 with the Sustainable Growth Commission report and in 2022 with the A Stronger Economy With Independence paper – would have been our economic direction.

My final assumption is that we would have been in the EU and still using Sterling with the Euro as our final destination.

My assumptions are solidly based on what the SNP have said since 2014. As no data on an independent Scotland exists (unfortunately), we must look for evidence where we can.

Given my assumptions and the available evidence, using current data for Scotland as part of the UK to estimate our position as an independent nation is a reasonable approximation.

We would have had a similar growth trajectory as we do now. Being part of the EU may have increased our GDP, but barriers to trade with the UK may have reduced it.

We would have adopted the EU’s Stability and Growth Pact, which mirrors the UK’s fiscal rules, so government spending and “public debt” levels would have been the same.

Inflation would be the same, spiking during Covid and back to historic levels at between 2% and 3%.

Based on the same economic paradigm, there is no reason to suggest that unemployment would be lower.

As we would not have had our own currency, our interest rates would have remained the same, set by the Bank of England under the guidance of the UK Treasury.

Our balance of trade would still be in flux, and exports could be slightly higher or lower. So again, where we are now is a fair proxy.

Five years of planning for independence and then five years of independence would have little impact on our macroeconomic indicators.

And here is my most important point: this was the plan all along!

The whole proposal for independence then, as now, from the SNP is to steadily and slowly move to a UK-lite economy. We see that as clearly as night follows day. Yet, we keep voting for them.

(Image: PA)

The Green Industrial Strategy, published last week, is yet more evidence that our economy would change little should we follow this SNP “vision” for our economy. How financial services found itself as one of the five areas for our green industrial strategy is well beyond my ken! The strategy didn’t mention a wellbeing economy or community wealth building in its 54 pages. It mentioned community energy once.

I couldn’t find evidence suggesting any SNP administration would have taken a significant jump to the left after winning independence. An SNP administration is solidly neoliberal in mindset. It is addicted to the institutional framework within the UK. Its grand plan to attract foreign capital using our vast natural resources as security will not create the type of economy we crave. That was the case in 2014, and sadly, it is the same today.