1 Scottish Government (2021) The Brexit vote, 5 years on - what do we know so far?
2 Office for Budget Responsibility (2022) Brexit analysis (updated 26 May 2022); Centre for European Reform (2021) Cost of Brexit (October 2021); Breinlich, H, Leromain, E, Novy, D and Sampson, T The Brexit Vote, Inflation and UK Living Standards International Economic Review Vol. 63, No.1 February 2022
3 Resolution Foundation (2022) Stagnation Nation: interim report of the Economy 2030 Inquiry The performance of the UK economic model was discussed in the first publication in the Building a New Scotland series, Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland?
4 In August 2022, the UK had the highest annual rate of inflation in the G7, see OECD (2022) Inflation (CPI) (indicator). doi: 10.1787/eee82e6e-en (Accessed on 14 September 2022). Smith, A and Sheppard, D How do household energy bills compare across Europe? Financial Times, 7 September 2022. IMF (2022) Surging Energy Prices in Europe in the Aftermath of the War: How to Support the Vulnerable and Speed up the Transition Away from Fossil Fuels – Annex 2 confirms that energy costs are a relatively high proportion of UK total household consumption – especially for the bottom decile (higher than in any other European country)
5 Also known as ‘supply-side economics’
6 Krugman, P (1999) The Accidental Theorist, Penguin
7 Hope, David; Limberg, Julian (2022). “The Economic Consequences of Major Tax Cuts for the Rich”. Socio-Economic Review. 20 (2): 539–559. doi:10.1093/ser/mwab061
8 Stiglitz, Joseph E. (2016). “Inequality and Economic Growth”. Rethinking Capitalism. Wiley-Blackwell: 134–155. doi:10.7916/d8-gjpw-1v31
9 Dabla-Norris, Era; Kochhar, Kalpana; Suphaphiphat, Nujin; Ricka, Frantisek; Tsounta, Evridiki (June 15, 2015). “Causes and Consequences of Income Inequality: A Global Perspective”. International Monetary Fund.
10 Scottish Government (2021) After Brexit: The UK Internal Market Act and devolution
11 Scottish Government (2022) Renewing democracy through independence
12 McCann, P. (2019) Perceptions of Regional Inequality and the Geography of Discontent: Insights from the UK, p14 ( Productivity Insights Network)
13 Analysis provided in Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland? confirms that the UK has lower productivity, higher poverty and higher inequality than a comparator group of European countries (Ireland, Denmark, Norway, Sweden, Austria, Finland, Iceland, Netherlands, Switzerland and Belgium). The UK also has lower productivity, higher income inequality and higher poverty rates than Germany and France
14 Office for Budget Responsibility (2022) Brexit analysis (updated 26 May 2022). Many other reports from a wide range of respected economic researchers confirm the negative economic impacts of Brexit. For instance, the Centre for European Reform (2021) Cost of Brexit (October 2021) analysis found that ‘In October 2021, UK goods trade was 15.7% or £12.6 billion lower than it would have been if the UK had stayed in the EU’s single market and Customs Union’
15 Parker, G and Giles, C The deafening silence over Brexit’s economic fallout Financial Times, 20 June 2022
16 Kyd, J G (1952) Scottish population statistics including Webster’s analysis of population 1755 (third series, volume 44). Edinburgh: T and A Constable Ltd. Printers to the University of Edinburgh for the Scottish History Society
17 National Records of Scotland (2022) Projected Population of Scotland (2020-based)
18 Scottish Fiscal Commission (2022) Trends in Scotland’s population and effects on the economy and income tax
19 Resolution Foundation (2022) Stagnation Nation: interim report of the Economy 2030 Inquiry
20 Resolution Foundation (2022) Stagnation Nation: interim report of the Economy 2030 Inquiry
21 Resolution Foundation (2022) Stagnation Nation: interim report of the Economy 2030 Inquiry
22 Parker, G and Giles, C The deafening silence over Brexit’s economic fallout Financial Times, 20 June 2022
23 OECD (2022), OECD Economic Outlook, Volume 2022 Issue 1, OECD Publishing, Paris, https://doi.org/10.1787/62d0ca31-en.
24 Mann, C L (2022) A monetary policymaker faces uncertainty − speech by Catherine L Mann Bank of England
25 Resolution Foundation (June 2022) The Big Brexit: an assessment of the scale of change to come from Brexit
26 Resolution Foundation (June 2022) The Big Brexit: an assessment of the scale of change to come from Brexit – Key Findings section
27 Scottish Government (2022) State of the economy: May 2022 - Trade
28 Non-oil and gas imports from the EU were still 14% lower in the year ending March 2022 compared to the year ending March 2020. In contrast, Scotland’s imports from Non-EU countries were only 1% lower over this period.
29 All comparisons are provided for sectoral EU imports in the year ending March 2022 vs the year ending March 2020. Regional trade statistics analysis: fourth quarter 2021 – GOV.UK (www.gov.uk)
33 In the Act the Westminster Government also took back spending powers in devolved policy areas that had been removed from it on the establishment of devolution in 1999. That has enabled it to exercise unilateral control over the UK replacement to EU Structural Funds (ESF), the Shared Prosperity Fund (SPF), bypassing the Scottish Parliament and Government and undermining devolved decision-making. The Fund has also been replaced at significantly lower levels of investment. Scottish Government (2021) After Brexit: The UK Internal Market Act and devolution.
34 Office of the United States Trade Representative (2019) Summary of U.S.-UK Negotiating Objectives
35 Scottish Government (2020) UK internal market: initial assessment of Westminster Government proposals
36 O’Rourke, KH. Independent Ireland in Comparative Perspective, Irish Economic and Social History, Vol 44, Issue 1, November 2017, pp 19-45
37 This trade diversification reflects not only the historical reliance on trade with Britain but also the export pattern of newly established foreign firms in Ireland. A number of features of Irish economic policy contributed to improved performance post EU accession, including but not limited to: low corporation tax and other incentives for inward investment, the availability of well-educated but under-employed labour as the economy started to grow rapidly, English language and a trade-friendly time-zone, and the enduring social partnership which facilitated wage moderation and macroeconomic stability through the late 1980s to early 2000s. Nevertheless, the expansion of trade with EU countries at the expense of more traditional links is notable.
38 Net National Income per head is included in this table because there are widely recognised problems with using GDP as a measure of the Irish economy. These have been set out by the Central Bank of Ireland in, Byrne S, Conefrey T and O’Grady M (2021) The Disconnection of GDP from Economic Activity Carried out in Ireland (Central Bank of Ireland) and FitzGerald, J. (2018). National Accounts for a Global Economy: the case of Ireland, QEC Special Article, Dublin: Economic and Social Research Institute (ESRI)
39 See chart 3 ‘historical labour productivity’ in Tenreyo, S The fall in productivity growth: causes and implications Bank of England speech, January 2018. Also Erber, G, Fritsche, U and Harms, PC The Global productivity Slowdown: Diagnosis, Causes and Remedies Review of European Economic Policy, Vol 52, 2017
40 House of Commons Library (2021) Income Inequality in the UK
41 This intellectual shift is reflected in numerous publications but prominent examples include: Ostry, J, Berg, A, and Tsangarides, C (2014), Redistribution, Inequality, and Growth (International Monetary Fund); OECD (2015) In It Together: Why Less Inequality Benefits All; and, OECD (2018) Good Jobs for All in a Changing World of Work: The OECD Jobs Strategy; OECD New Approaches to Economic Challenges
42 OECD (2018) Good Jobs for All in a Changing World of Work: The OECD Jobs Strategy. A useful summary is provided in this blog, Bell, K (2018) The OECD says collective bargaining is the best way to deliver better work TUC
43 Office for National Statistics (2022) Regional labour productivity, UK; Scottish Government (2022) Scotland’s National Strategy for Economic Transformation: evidence paper; Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland?
44 £14,000 is the difference between Scotland’s GDP per capita (offshore measure) and the average GDP per capita of the ten small economies as introduced in Independence in the modern world. Wealthier, happier, fairer: why not Scotland? - gov.scot (www.gov.scot). There are widely recognised concerns over Ireland’s GDP statistics and therefore it is worth noting that the difference in GDP per capita between Scotland and the average for this group of countries excluding Ireland remains significant, on average £11,000 per person higher in 2021. Scotland’s GDP per capita includes a geographical share of extra-region (offshore) activity and is sourced from GDP Quarterly National Accounts: 2022 Quarter 1 (January to March) - gov.scot (www.gov.scot). GDP per capita, measured in current prices and current Purchasing Power Parities (PPPs), for other countries is sourced from OECD database Level of GDP per capita and productivity (oecd.org). Scotland’s GDP per capita in current prices and current PPPs is estimated by applying a PPP conversion factor for the UK published by OECD. Conversion rates - Purchasing power parities (PPP) - OECD Data Difference in levels of GDP per capita reflects differences in historical growth rates and past performance may not be indicative of future performance
45 Office for National Statistics Annual regional labour productivity 1998-2020 dataset (Accessed August 2022)
46 Median gross weekly full-time earnings data from the Annual Survey of Hours and Earnings: annual survey of hours and earnings – resident analysis – Nomis – Official Census and Labour Market Statistics
47 Scottish Government (2022) Labour Market Trends: September 2022 (accessed September 2022)
48 Scottish Government (2022) Scotland National Strategy for Economic Transformation: evidence paper
49 Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland?
50 Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland?
51 European Union EU and European Commission priorities 2019-2024
52 Natural capital is the environmental resources (e.g. plants, animals, air, water, soils) that combine to yield a flow of benefits to people. Scottish Government (2022) Scottish Natural Capital Accounts 2022
53 Oxford Economics (2021) UK Green Growth Index Lloyds Banking Group
54 The UK Green Growth Index has two “domains”: Green growth challenge: the degree to which the net zero transition could create economic challenges; and Green growth opportunity: the degree to which the conditions are in place to capitalise on the growth of the green economy. The challenge themes are: dependence on carbon-intensive industry; current emissions; and fossil fuel power infrastructure. The opportunity themes are: base of green industry; skills and training; innovation; and renewable energy
55 United Nations UN Convention on the Law of the Seas Part V Exclusive Economic Zone↩
56 Marine Scotland Information Facts and figures about Scotland's sea area (coastline length, sea area in sq kms) (accessed August 2022)
57 United Nations UN Convention on the Law of the Seas Part IV Continental Shelf.
58 Marine Scotland Information Facts and figures about Scotland's sea area (coastline length, sea area in sq kms) (accessed August 2022)
59 “Core waters” refers to waters within the “metropolitan” or “European” EU i.e. excluding the Special Territories of the EU (e.g. Outermost Regions and Overseas Countries and Territories).
60 Further information on Exclusive Economic Zones is available via the European Marine Observation and Data Network - Exclusive Economic Zones
61 Scottish Government (2015) Scotland's National Marine Plan
62 The Faroes Special Area is an agreement that third country fishing vessels can be authorised by Faroe Islands to fish within the Scottish zone: UK/Denmark: Protocol to Agreement with Faroe Islands on Maritime Delimitation [CS Denmark No.1/2013]
63 With the exception of the digital technologies sector which uses 2021 data, we provide sectoral statistics from 2019 in order to give a picture of Scotland’s performance in these areas before the complications of the Covid-19 pandemic.
64 GVA is the standard economic measure of the value of goods and services produced in an area, industry, sector or region of an economy
65 Scottish Government (2022) Growth Sector Statistics (accessed August 2022)
66 Scottish Government (2022) Growth Sector Statistics (accessed August 2022)
67 HMCR Overseas Trade Statistics – Fresh or chilled Atlantic salmon exports (accessed September 2022)
68 Scottish Annual Business Statistics 2020 (accessed September 2022)
69 HMRC Overseas Trade Statistics – Scotch whisky (accessed September 2022)
70 Scottish Annual Business Statistics 2020 (accessed September 2022)
71 Scottish Government (2022) Growth Sector Statistics (accessed August 2022)
72 Scottish Government (2022) Growth Sector Statistics (accessed August 2022) (note – in this Growth Sector Statistics dataset, tourism statistics are listed under ‘sustainable tourism’)
73 Scottish Government (2022) Growth Sector Statistics (accessed August 2022): The Financial and Business Services sector is based on a broad definition that includes SIC 2007 codes 64-82 Using a narrower definition of financial and related professional services results in a figure of 153,000 (UK Based Financial and related Professional Services – TheCityUK). Financial and Business Services relates only to those sectors fully covered in ABS (so excludes financial and insurance activities). Therefore a Financial and Business Services Scotland total GVA is not provided in growth sector statistics.
74 Ethical Finance Hub Mapping the Responsible Investment Landscape in Scotland
75 University of Edinburgh School of informatics research excellence; The Data Lab DataFest; Scottish Government (2018) Edinburgh and South East City Region Deal; Scottish Government (2022) Inspiring a new generation of tech entrepreneurs
76 The Princeton Review 2022 top postgraduate programs for video game design; The Princeton Review 2022 Top undergraduate programs for video game design
77 Skills Development Scotland (2022) Sectoral Skills Assessment: Digital Technologies
78 Skills Development Scotland (2019) Scotland’s Digital Technologies – Summary Report
79 Scottish Government (2022) Scotland’s National Strategy for Economic Transformation: evidence paper; Scottish Government; Life Sciences Scotland, Animal Bioscience, Aquaculture and Agritech (last accessed 12/06/22)
80 Scottish Government (2022) Growth Sector Statistics (accessed August 2022)
82 Scottish Government Manufacturing – Space sector (accessed September 2022). UK Space Trade Association (2022) Britain competes for the launch of an estimated 2,000 satellites by 2030 (ukspace.org)
83 Times Higher Education World University Rankings 2023
84 Muscatelli, A. (2019) The Muscatelli Report, Driving Innovation in Scotland – A National Mission (University of Glasgow)
85 Scotland’s AI Strategy (2021) Scotland's AI Strategy – Scotland's AI Strategy
86 Life Sciences Scotland, Animal Bioscience, Aquaculture and Agritech (last accessed 12/06/22)
87 Scottish Government (2021) Scottish Space Strategy launched
88 Scottish Government (2021) Supporting Our Digital Technology Sector – A changing nation: how Scotland will thrive in a digital world
91 Universities Scotland (2019) Higher Education’s contribution to the National Performance Framework: economy, fair work and business. Universities Scotland’s submission to the Scottish Government 2020/21 budget
92 This comparison is based on data for Scotland, the UK and all EU countries included in the OECD Regional Education Statistics dataset (select the required Geography from ‘Country’) (accessed 31 August 2022). Malta and Cyprus are not in the OECD dataset, so comparative data for those EU countries was taken from Eurostat Population by educational attainment level, sex and NUTS 2 regions (%) data (select ‘Tertiary education (levels 5-8)’ from ‘International Standard Classification of Education’ drop down)(accessed 8 September 2022). Until 2019, Scotland and the UK were included in the Eurostat dataset, which showed Scotland outperforming all EU nations
93 Erasmus+ (n.d.) Erasmus+ Statistics (last accessed 08/09/22)
95 European Commission Horizon Dashboard
96 Higher Education Statistics Agency (HESA) Table 7 – Income analysed by source 2015/16 to 2020/21 (accessed August 2022)
97 The financial system comprises money, financial instruments, financial markets, financial institutions, regulatory agencies, and central banks.
98 Tetlow, G and Pope T (2022) What new institutions of economic policy would an independent Scotland need? Economics Observatory
99 Under the gold standard, the amount of money in the economy was dependent on the amount of gold. After World War I, all major countries worked to reconstruct the gold standard and the Bretton Wood system of fixed exchanges rates was formed in 1945.
100 For an account relating to Ireland see Honohan, P (2019). Currency, Credit and Crisis: Central Banking in Ireland and Europe. Cambridge University Press.
101 A currency peg is where a national government or central bank sets a fixed rate of exchange for its own currency against a foreign currency (or a basket of currencies). A currency peg is often used to encourage trade between countries. Neither Greenland nor Faroe Islands are members of the EU.
102 Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland?
103 See for example: Institute for Government (2021) Currency options for an independent Scotland; MacDonald, R (2022) What would the currency options be for an independent Scotland, Economics Observatory; and Kay, J (2022) Currency options for an independent Scotland in Hassan, G. and Barro, S (eds). A Better Nation: The Challenges of Scottish Independence, Luath Press Limited Edinburgh.
104 For example within the EU and UK all bank deposits are guaranteed to the value of £85,000. See Financial Services Compensation Scheme | Bank of England
105 As the role of the Scottish Central Bank evolves, its mandate would change to reflect price stability as well. For discussion of role of central bank see Mackintosh, S. (2022) ‘Creating the National Bank of Scotland and the Scottish Pound: Establishing an Institutional Pathway and a Timeline for Success’; and Hardie, I (2022). Currency choice of an independent Scotland: what role for the central bank? Economics Observatory.
106 The Scottish Central Bank would be independent of Government, which is a model adopted by many developed economies. For example, Ireland is part of the Euro area which means that the monetary policy for Ireland is exercised by the independent European Central Bank as part of the monetary policy setting for the whole Euro area. On financial regulation, in the UK financial conduct authority (FCA) operates independently of government and is responsible for protecting consumers for bad conduct, ensuring the integrity of the UK financial system and promoting effective competition in the interests of consumers. Similar functions exist in Ireland, Denmark and Ireland. For fiscal policy, most small economies have a separate institution to carry out debt management policy on behalf of Government.
107 After the financial crisis of 2008 and the far reaching impact of this event on finances and public confidence in the financial system’s stability, new international standards were established to promote measures designed to avoid any future crises. We would align the Scottish Central Bank’s functions with these international standards and establish a resolution regime which ensured the continuity and stability of systemically important financial services, avoiding any adverse effects on the financial stability of the wider economy, and protecting public funds by minimising reliance on public financial support to bail out at risk banks.
109 Bank of Scotland is part of Lloyds Banking Group (UK), while Royal Bank of Scotland (RBS) is part of National Westminster (UK).
110 For an example, see: Central Bank of Ireland – Strategic role of Central Bank of Ireland
111 These statistics, which include economic indicators such as trade in goods and services and international investment and income flows, are currently produced for the UK by the Office for National Statistics.
112 Bank of England UK International Reserves – August 2022 (accessed October 2022). In addition, the Bank of England holds reserves of $20.7 billion for precautionary purposes
113 International Monetary Fund (2022) World Economic Outlook Database, April 2022
114 Other countries using the Danish Krone are Greenland and the Faroe Islands.
115 The only other country to use the Swiss Franc is Lichtenstein.
116 The other territories to use sterling are Jersey, Gibraltar, Guernsey, the Isle of Man, South Georgia and the South Sandwich Islands, and Saint Helena, Ascension and Tristan da Cunha. Note that Gibraltar, the Isle of Man, Saint Helena and Ascension also issue their own currency which is at parity with pound sterling.
117 GDP is measured in current U.S. dollars. Reserves comprise holdings of monetary gold, special drawing rights, reserves of IMF members held by the IMF, and holdings of foreign exchange under the control of monetary authorities. The gold component of these reserves is valued at year-end (December 31) London prices. Data are in current U.S. dollars.
119 Office for National Statistics (2022) Country and regional public sector finances, UK financial year ending 2021
120 Philips, D. (2022) Scotland’s underlying public finances are improving as oil and gas revenues rise – but long-term challenges remain Institute for Fiscal Studies (IFS)
121 Scottish Government (2021) Scottish Budget 2022 to 2023
122 Revenue from Scottish Income tax, Land and Buildings Transaction Tax, Scottish Landfill Tax and Non-domestic rates as a share of total Scotland budget.
123 Scottish Government (2021) Framework for Tax 2021
124 The Block Grant is the grant received by the Scottish Government and other Devolved Administrations as part of the current cross-UK funding arrangements. Changes in the Block Grant are determined by the Barnett Formula, which provides the Devolved Administrations with a proportion of increases or decreases in UK expenditure on devolved policy. Further detail on the operation of the funding arrangements are set out in: Scotland’s Fiscal Outlook: The Scottish Government’s Medium-Term Financial Strategy and Fiscal framework technical note: May 2022
125 Scottish Government (2021) Scottish Budget 2022 to 2023
126 Office for National Statistics Regional gross domestic product: all ITL regions (accessed August 2022)
127 PSNB as a percentage of GDP has been greater than 3.0% in 28 of the last 50 years. Office for Budget Responsibility (2022) Public finances databank 2021-22 (accessed August 2022)
128 OECD (2022), General government deficit (indicator). doi: 10.1787/77079edb-en (Accessed on 15 September 2022)
129 Office for Budget Responsibility (2022) Economic and fiscal outlook - March 2022
130 Other expenditure includes devolved capital spending, Scotland’s population share of UK Defence spending, Debt Interest payments, overseas development aid, transport, economic development, common services and other small spending lines.
131 Scottish Government (2022) Government Expenditure & Revenue Scotland (GERS) 2021-22
132 The Scottish Fiscal Commission has highlighted that slowing adult population growth and a declining labour market participation rate are key drivers in the declining rate of longer-term economic growth in Scotland: Scottish Fiscal Commission (2022) Scotland’s Economic and Fiscal Forecasts. Analysis by National Records Scotland shows that migration is the main reason for projected population growth in the next few years but beyond 2028 this will no longer offset the gap between births and deaths: National Records of Scotland (2022) Scotland's population projected to fall
133 Sovereign debt is issued by a country’s government to borrow money, usually in the form of securities. It is also known as government debt, public debt, or national debt.
134 HM Treasury (2015) HM Treasury review of the Office for Budget Responsibility
135 Automatic stabilisers are government policies that offset economic fluctuations through their normal operation, without additional intervention by government. For example in times of weak economic performance and higher unemployment, spending on employment support increases due to an increase in claimants, supporting consumer demand without additional government action.
136 International Monetary Fund (2014) Strengthening Post-Crisis Fiscal Credibility: Fiscal Councils on the Rice – A New ;set
137 International Monetary Fund (2009) Fiscal Rules – Anchoring expectations for Sustainable Public Finances
138 Budget balance rules constrain the budget aggregate that primarily influences the debt ratio and are largely under government control.
139 Debt rules set an explicit anchor or ceiling for public debt, often expressed in percent of GDP
140 Expenditure rules set limits on total, primary, or current government expenditures.
141 Revenue rules set ceilings or floors on revenues and are aimed at boosting revenue collection and/or preventing an excessive tax burden.
142 Institute for Government (2022) Fiscal rules in the UK since 1997
143 For a discussion on the impact of austerity on the UK and Scotland, please refer to pages 32 nd 33 of Renewing Democracy through Independence, Scottish Government, 2022
144 von der Leyen, U. A Union That Stands Strong Together (European Commission State of the Union Address, September 2022)
145 Public Sector Net Debt is the total amount that the public sector owes, which is largely the stock of past borrowing.
146 OECD (2019) OECD Review of the Scottish Fiscal Commission, p2
147 Scottish Fiscal Commission (2022) Corporate Plan 2022-25
148 The International Monetary Fund and The World Bank (2014) Revised Guidelines for Public Debt Management
149 The UK DMO’s cash management objective is to ensure that sufficient funds are always available to meet any net daily central government cash shortfall and, on any day there is a net cash surplus to ensure that this is used to best advantage. UK Debt Management Office Money Markets
150 HM Treasury (2014) UK debt and the Scotland independence referendum, p1
151 Institute for Government (2021) How would an independent Scotland Borrow?
152 Roberts, C and Lawrence, M (2018) Our Common Wealth: A Citizens’ Wealth Fund for the UK (IPPR Commission on Economic Justice) https://www.ippr.org/files/2018-04/cej-our-common-wealth-march-2018.pdf
153 Based on a geographical share of North Sea Revenues. GERS uses the share reported in the ONS Country and Regional Public Sector Finances publication. The estimate is based on the median line principle as employed in 1999 to determine the boundary between Scotland and the rest of the UK for fishery demarcation purposes. Production, costs and revenue are allocated on a field by field basis to either the rest of the UK or Scotland using this boundary
154 Scottish Government (2022) Government Expenditure & Revenue Scotland (GERS) 2021-22
155 Scottish Government (2022) Government Expenditure & Revenue Scotland (GERS) 2021-22
156 Philips, D. (2022) What might the public finances of an independent Scotland look like? (Economics Observatory)
157 Philips, D. (2022) Scotland’s underlying public finances are improving as oil and gas revenues rise – but long-term challenges remain Institute for Fiscal Studies (IFS)
158 The impact of the Energy Profits Levy has not yet been assessed by the OBR, and the levy includes generous allowances for new investment, which may lead to revenue being lower than HMT’s forecast. However, this may also be offset by higher energy prices. There may also be other changes to the underlying Scottish and UK fiscal position in the short term as the economic and fiscal impacts of rising inflation become clearer. However, the last time receipts were at a similar level, in 2011-12, the Scottish fiscal position was similar to that of the UK
159 Scottish Government (2021) A National Mission with Local Impact: Infrastructure Investment Plan for Scotland 2021-22 to 2025-26
162 Abiad, A et al. (2014) Is it time for an infrastructure push? The macroeconomic effects of public investment International Monetary Fund (pdf). Associated blog and video available at IMF Survey: The Time Is Right for an Infrastructure Push
163 Scottish Government (2018) Infrastructure investment: evidence summary
164 Scottish Government (2018) Infrastructure investment: evidence summary pp13-15
165 OECD (2016) The positive effect of public investment on potential growth
167 Having a higher level of capital intensity in the economy typically allows workers to be more productive. The investment package would also lead to improvement in labour productivity and real disposable incomes. Ultimately, the economic gains from infrastructure investment are shaped by the degree of economic slack, the method of financing and the efficiency of public investment: Abiad, A et al. (2014) Is it time for an infrastructure push? The macroeconomic effects of public investment International Monetary Fund
168 Scottish Government (2021) A National Mission with Local Impact: Infrastructure Investment Plan for Scotland 2021-22 to 2025-26
169 European Union EU and European Commission priorities 2019-2024
170 The Fund’s strategic aims are also closely aligned with the following missions of the Scottish National Investment Bank: ‘Achieving a Just Transition to net zero by 2045. Invest in rebalancing the economy towards leadership in sustainable technology, services and industry’ and ‘Extending equality of opportunity through improving places by 2040’
171 A range of literature discusses the winners and losers of globalisation. Key texts include: Rodrik, R (2017) Straight Talk on Trade, Princeton University Press; and, Autor, D, Dorn, D and Hanson, G (2016) The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade Annual Review of Economics, vol 8(1)
172 Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland? discusses the relatively high social spending of comparator countries: in total and particularly on labour market policies. See pp48-51
173 Rodrik, R (1998) Why do more open economies have bigger governments? Journal of Political Economy, Vol. 106, No. 5, pp997-1032; and, Cameron, D (1978) The Expansion of the Public Economy: A Comparative Analysis The American Political Science Review, Vol. 72, No. 4, pp. 1243-1261
174 Kalafsky, R and Brown, R Reappraising Scotland’s exports and their geographies: Brexit and beyond, Fraser of Allander Institute
175 Scottish Government (2019) Export Growth Plan: methodology note, p8
176 Scottish Government (2022) State of the Economy: May 2022
177 UK in a Changing Europe (2022) UK Trade in the wake of Brexit,
178 Springford, J (2022) The Cost of Brexit: December 2021, Centre for European Reform
179 Springford, J (2022) The Cost of Brexit: December 2021, Centre for European Reform
180 Scottish Government (2019) A Trading Nation: analytical methodology note
181 European Commission EU position in world trade (accessed September 2022)
182 Scottish Government, New Zealand trade agreement letter to the UK Government 21 August 2022
183 European Commission (2021) Communication on the Trade Policy Review
184 Scottish Government (2022) Scotland's Vision for Trade: annual report - March 2022
185 Scottish Government (2022 )Scotland's National Strategy for Economic Transformation - gov.scot (www.gov.scot)
186 Scottish Government (2019) Scotland: a trading nation
187 The EU-UK Trade and Cooperation Agreement between the EU and the UK sets out preferential arrangements in areas such as trade in goods and in services. It was negotiated in response to the Westminster Government’s decision to leave the European Union. European Commission The EU-UK Trade and Cooperation Agreement (2021)
188 Cabinet Office (2019) Memorandum of Understanding between the UK and Ireland on the CTA
189 The 2019 Memorandum of Understanding between the UK and Ireland on the CTA recorded that both Governments have a “shared commitment to the protection of the CTA and associated reciprocal rights and privileges as a legitimate and fundamental public policy”. In Hayward, K. and McEwen, N. (2022) An EU border across Britain: Scotland's borders after independence UK in a Changing Europe, the authors noted that “given its unique geographic and historic circumstances, most specifically the existence of the Common Travel Area (CTA), most experts assume that Scotland would most likely seek and be granted an opt-out from the border control elements of the Schengen Agreement during membership negotiations with the European Union”.
190 Scottish Government (2021) Export Statistics Scotland 2019
191 Scottish Government (2021) Export Statistics Scotland 2019. agriculture, forestry and fishing products exports are counted under ‘Other’ in these export statistics; and retail & wholesale are included under ‘Services’
192 Hayward, K. and McEwen, N. (2022) An EU border across Britain: Scotland's borders after independence UK in a Changing Europe
193 SchengenVisaInfo (2022) EU Council Approves Extension of Mobile Roaming Scheme Without Extra Fees Throughout the Bloc
194 Pinsent Masons (2022) Digital Single Market and Scott Marcus, J, Petropoulos, G and Yeung, T (2019) Contribution to growth. The European Digital Single Market. Delivering economic benefits for citizens and businesses European Parliament
195 Halpin, P EU would consider veterinary agreement with UK – Sefcovic, Reuters, February 25, 2021
196 Both agreements retain documentary checks, but these are quicker or can be completed remotely.
197 European Commission The EU Single Window Environment for Customs
198 Cabinet Office (2020) 2025 UK Border Strategy
199 Curran, I. Rosslare Europort acquires 18-acre site to help add capacity as port expands, Irish Times, 29 June 2022
200 Karlsson, L. (2017) Smart Border 2.0 Avoiding a hard border on the island of Ireland for Customs control and free movement of persons (Policy Department for Citizens’ Rights and Constitutional Affairs)
201 Liz Truss: It’s fair to give wealthiest more money back, BBC News website, 4th September 2022
202 Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland?↩
203 The analysis set out in Independence and the Modern World is backed up by other recent reports and commentary. See, for instance, Liz Truss thinks we have to choose between inequality and growth – but it does not have to be this way, New Statesman, 7 September 2022 and Stagnation Nation, Resolution Foundation, July 2022
204 Kwasi Kwarteng A Liz Truss government would be unashamedly pro-growth 4th September 2022
205 OECD (2015) In It Together: Why Less Inequality Benefits All pg 26
206 The Gini coefficient is a measure intended to represent the income or wealth inequality within a nation or a social group.
207 Dable-Norris, E, Kochhar, N, Suphiphiphta, N, Ricka, F, Tsounta, E Causes and Consequences of Income Inequality: A Global Perspective. IMF (2015) pg 6
208 Scottish Government (2022) Energy Statistics for Scotland – Q4 2021 figures
209 Scottish Government, Scottish Energy Statistics Hub Operational renewable capacity (see ‘quarterly capacity by technology’ table for 2022 Q2 data, and ‘annual capacity by technology’ table for annual data back to 2000)
210 Scottish Government, Scottish Energy Statistics Hub Installed supply capacity and peak electricity demand
211 A gigawatt is one billion watts. The United States Department of Energy provides useful illustrations of how much power this is: How Much Power is 1 Gigawatt?
212 Scottish Government Scottish Energy Statistics Hub – Operational renewable capacity as at Q2 2022
213 Scottish Government (2021/22) Onshore Wind Policy Statement Consultation
214 Scottish government (2021) Chapter 5: Economic Opportunities – Onshore wind – policy statement refresh 2021: consultative draft
216 Crown Estate Scotland (2022) ScotWind offshore wind leasing delivers major boost to Scotland’s net zero aspirations – News – Crown Estate Scotland
218 Scottish Government Scottish Energy Statistics Hub – Pipeline renewable capacity as at Q2 2022
219 Scottish Government, Scottish Energy Statistics Hub Operational renewable capacity as at Q2 2022; Uk Government https://www.gov.uk/government/statistics/electricity-chapter-5-digest-of-united-kingdom-energy-statistics-dukes
220 Scottish Government (2021/22) Onshore Wind Policy Statement Consultation
221 Scotland currently has 13.3GW of renewable energy capacity already built in Scotland and 16.0GW in the planning and construction pipeline. Scottish Energy Statistics Hub – Operational renewable capacity as at Q1 2022; Scottish Energy Statistics Hub – Pipeline renewable capacity as at Q1 2022
222 Scottish government (2021) Chapter 5: Economic Opportunities – Onshore wind – policy statement refresh 2021: consultative draft
223 Crown Estate Scotland (2022) ScotWind offshore wind leasing delivers major boost to Scotland’s net zero aspirations – News – Crown Estate Scotland
224 Scottish Government, Scottish Energy Statistics Hub Operational renewable capacity as at Q1 2022
225 Scotland has signed memorandums of understanding on exporting hydrogen and knowledge exchange with Hamburg, North-Rhine Westphalia and Denmark.
226 Scottish Government (2020) Scottish hydrogen: assessment report
227 Scottish Government, Scottish Energy Statistics Hub Oil and gas consumption (2019)
228 Gross Domestic Product is the standard economic measure of the total value of goods produced and services provided in a country during one year.
229 Scottish Government, Scottish Energy Statistics Hub Gross value added (GVA) associated with oil and gas production
230 Scottish Government Scottish Energy Statistics Hub - Scottish Oil and gas employment https://scotland.shinyapps.io/sg-scottish-energy-statistics/?Section=OilGas&Chart=OilGasEmployment
231 The Acorn Project About the Acorn Project
232 Green House Gas emissions are generally expressed in megatonnes of CO2 equivalents (1 megatonne = 1 million tonnes = 1 billion kilograms).
233 The Acorn Project (2021) Scottish Cluster expected to deliver 20,600 jobs in the next decade↩
234 1 Gigatonne (Gt) = 1 billion tonnes.
235 The Energy Technology Institute (2016) Progressing Development of the UK’s Strategic Carbon Dioxide Storage Resource: A Summary of Results from the Strategic UK CO2 Storage Appraisal Project
236 European Commission (2022) Joint European action for more affordable, secure energy
238 Fair Work Convention (2016) Fair Work Framework
239 Resolution Foundation has found that “there is widespread non-compliance [with employment law] and that those with the lowest level of connection to the labour market in elementary occupations, and in fragmented types of work are the most at risk of being on the receiving end of unlawful behaviour from employers.” Resolution Foundation (2019) From rights to reality: Enforcing labour market laws in the UK
240 Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland? – gov.scot (www.gov.scot), pp35-37
241 Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland? – gov.scot (www.gov.scot), pp45
242 Around half of disabled people aged 16 to 64 years (53.5%) in the UK were in employment compared with around 8 in 10 (81.6%) for non-disabled people (July to September 2021). Office for National Statistics (2022) Outcomes for disabled people in the UK: 2021
243 OECD (2022), Public spending on labour markets (‘Sheltered and Supported employment and rehabilitation’ indicator). doi: 10.1787/911b8753-en (Accessed on 15 July 2022)
244 Office for National Statistics (2022) A09: Labour market status by ethnic group
245 Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland?. See the first publication in the Building a New Scotland series for a discussion of differences between the UK and comparator country labour market models.
246 OECD Indicators of Employment Protection – OECD (latest year 2019). Among OECD nations, only the US has fewer legal employment protections than the UK.
247 For instance, the Employment Acts of 1980 and 1982, and the abolition of the National Economic Development Council in 1992. A pertinent recent example would be the decision to abolish the UK Commission for Employment and Skills (an advisory body on skills and employment policy involving trade unions, employers and government) in 2017.
248 OECD Indicators of Employment Protection (latest year 2019)
249 See for instance – Keune, M, Inequality between capital and labour and among wage-earners: the role of collective bargaining and trade unions, European Review of Labour and Research, 2021 and also discussion in section 2 of Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland?
250 European Council Adequate minimum wages in the EU
251 Scottish Government (2021) Fair Work Action Plan
252 Scottish Government (2019) A Fairer Scotland for Women: gender pay gap action plan
253 Scottish Government (2018) A Fairer Scotland for Disabled People: employment action plan
254 OECD (2020) Paid sick leave to protect income, health and jobs through the COVID_19 crisis Section 3 Strengthening support to employees suffering from Covid -19 (see chart 3 and associated data)
256 The Taylor Review defines the gig economy as ‘people using apps to sell their labour’. For a full discussion see: Taylor Review (2017) Good work: the Taylor review of modern working practices, p25,
257 The holiday entitlement of a worker without normal working hours is currently based on the amount of hours worked over a ‘pay reference period’ of 12 weeks. However, as the Taylor Review (2017) Good work: the Taylor review of modern working practices, (pp46-48) argued, “it is widely acknowledged that this does not work for everyone, especially where work is seasonal or there are significant peaks and troughs in work. For example, an individual may work 50 hours a week during the summer months and then scale back their hours for a month to just 10 hours a week before taking leave. In this situation, the individual would not necessarily get all the holiday pay to which they should have been entitled”.
258 OECD Employment Oulook 2021 Statutory annual paid leave and public holidays in OECD countries : Number of days per year, 2020
259 Resolution Foundation (2020) Under the wage floor: Exploring firms’ incentives to comply with the minimum wage
260 The Taylor Review recommended that “The Government should ask the Low Pay Commission to consider the design and impacts of the introduction of a higher NMW rate for hours that are not guaranteed as part of the contract.” Taylor Review (2017) Good work: the Taylor review of modern working practices, p44
261 OECD (2022), Public spending on labour markets (‘Total’ and ‘Training’ indicator). doi: 10.1787/911b8753-en (Accessed on 15 July 2022)
262 IMF News Kurzarbeit: Germany’s Short-Time Work Benefit, 15 June 2020
263 Further information on Job Security Councils is provided in: Scottish Government (2022) Independence in the modern world. Wealthier, happier, fairer: why not Scotland?, p52
265 The Danish Government (2019) Prepared for the future of work. Follow-up on the Danish Disruption Council
266 Foreign Direct Investment (FDI) or inward investment (which includes investment from the rest of the UK into Scotland) involves a company or institution headquartered outside of Scotland that establishes a base of operations within Scotland, creating jobs, economic opportunities and associated capital investment
267 Scottish Government (2020) Scottish Annual Business Statistics 2018
268 Scottish Government (2020) Scotland’s Inward Investment Plan: analytical methodology note
269 EY (2022) Scotland leads the way for FDI investment
270 Scottish Enterprise (2022) Investing in Ambition. Scotland’s Risk Capital Market in Context-2021
271 Scottish Government (2021) Investing with Purpose: global capital investment plan
272 The Scottish National Investment Bank (2021) Scottish National Investment Bank – Annual report and accounts
273 Scottish Government National Performance Framework: Entrepreneurial activity
274 Global Entrepreneurship Monitor (GEM)(2021) 2020 Scotland Monitoring Report
275 Higher Education Statistics Agency (HESA) Table 4e – Intellectual property: Spin-off activities by higher education provider 2014/15 to 2020/21
277 Big Innovation Centre (2017) The Purposeful Company – Policy Report
278 The Business, Innovation and Skills Committee (2012) The Kay review of UK equity markets and long-term decision making: final report
279 Business Purpose Commission for Scotland (2022) Now is the Time for Purpose
280 Scottish Government (2022) Independence in the Modern World pages 54 and 55 include a discussion on the benefits of codetermination
281 Section 1 Independence in the Modern World, Scottish Government 2022
282 Scottish Government (2022) Scottish Child Payment: interim evaluation
283 Scottish Government (2022) Best Start, Bright Futures: tackling child poverty delivery plan 2022 to 2026
284 For early learning and childcare see. OECD (September 2021) Chart PF3.1.B Public spending on childcare and early education; For parental leave see (OECD October 2021). Chart PF2.1.D Parental leave systems; for labour market policies see OECD (2022) Public spending on labour markets (indicator). doi: 10.1787/911b8753-en (Accessed on 09 September 2022)
285 International Cooperative Alliance and Euricse (2021) World Cooperative Monitor 2021; Vieta, M. Depedri, S. and Carrano, A (2017) The Italian Road to Recuperating Enterprises and the Legge Marcora Framework: Italy’s worker buyouts in times of crisis Euricse; CECOP – CICOPA Europe (2013) Business transfers to employees under the form of cooperatives in Europe
286 Scottish Enterprise Co-operative business support in Scotland
287 Office for National Statistics (2022) National population projections (accessed August 2022)
288 Scottish Fiscal Commission (2022) Trends in Scotland’s population and effects on the economy and income tax
289 National Records of Scotland (2021) Population by Country of Birth and Nationality, Scotland, July 2020 to June 2021 (accessed August 2022)
290 London accounted for 42% of the total Skilled Worker visas in 2021, compared to Scotland at 4%. Migration Advisory Committee (2021) Migration Advisory Committee (MAC) annual report, 2021
291 See Portes, J (2018) New evidence on the economics of immigration to the UK, VoxEU, CEPR for a review of new evidence based on the work of the Migration Advisory Committee
292 Previous modelling in Scottish Government (2018) Scotland’s Population Needs and Migration Policy: Discussion Paper on Evidence, Policy and Powers for the Scottish Parliament simulated scenarios based on a long-term annual increase in net overseas migration above the level assumed in the high migration variant of the ONS 2016 projections for Scotland and assumed no change in net migration from the Rest of the UK. At the time, the high migration variant was closer to the actual data on net migration. The Office for Budget Responsibility also judged in their Economic and fiscal outlook – November 2016 report that without the Brexit referendum it would be more appropriate to base forecasts on the high migration variant.
293 This is particularly true for recent EU migrants. See Wadsworth, J et al (2016) Brexit and the impact of immigration on the UK. More widely Oxford Economics (2018) The Fiscal Impact of Immigration on the UK Report for the Migration Advisory Committee; Orrenius, P (2017) New Findings on the Fiscal Impact of Immigration in the United States Federal Reserve Bank of Dallas; OECD (2013) The fiscal impact of immigration in OECD countries | International Migration Outlook 2013
294 Migration Advisory Committee (2018) EEA migration Studies by Campo, Forte and Portes; by Costas; and by Giulitti
295 The Federation of Small Businesses (2019) Starting over: migrant entrepreneurship in Scotland
296 Bahar, D, Choudhury, P and Rapoport, H (2020) Migrant Inventors and the Technological Advantage of Nations Harvard Business School, Research Policy, Vol 49, Issue 9
297 The Federation of Small Businesses (2019) Starting over: migrant entrepreneurship in Scotland
298 House of Lords Library (2018) Impact of ‘Hostile Environment’ Policy
299 Scottish Government (2020) Migration: helping Scotland prosper
300 Electronic Immigration Network (2019), The Times: Home Office made profits of £500 million from immigration and citizenship fees last year
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