Building a New Scotland: A stronger economy with independence

This paper sets out the Scottish Government’s proposals for the economy of an independent Scotland. It explains what these proposals would mean for you, for businesses, and for Scotland as a whole. It is the third in the 'Building a New Scotland' series, focusing on independence.

First Minister’s Foreword

It has never been clearer than it is today that Westminster is taking Scotland in the wrong direction.

UK Governments, with very different priorities from those of the majority of the Scottish people, have shown, time and again, that they cannot be trusted to act in Scotland’s interests.

In 2014, we were promised stability if we voted no to independence.

Since then, we’ve been subjected to one serious political crisis after another - all as a result of policies and decisions that Scotland did not vote for.

We now face a choice of two futures: becoming an independent country in which decisions about Scotland’s future are made by the people who live here; or accepting continued crisis and control from Westminster.

In this, the third publication in the Building a New Scotland series, the Scottish Government demonstrates that the case for independence is not an abstract argument separate from people’s daily concerns, but has at its heart the ambition to improve the lives, wellbeing and future prospects of the people of Scotland.

Indeed, to prevent further economic damage being inflicted by Westminster governments, independence is now essential.

As a country, we are blessed with extraordinary natural and energy resources, world-leading industries, such as food and drink and renewable energy, and, above all, a highly educated and talented workforce supported by some of the world’s very best colleges and universities.

In short, we have strong foundations and great economic potential.

And yet, it is clear that the UK economic model, of which we are currently part, is ill-equipped – especially in the wake of Brexit – to cope with events like the cost of living crisis.

The UK’s economy is both less productive and more unequal than independent European countries comparable to Scotland.

This was true before the UK Government’s recent decision to borrow heavily to pay for tax cuts for the richest in society. It is even more so now. The calamitous consequences of the UK Government’s recent choices will impact on the economy, living standards and public services for years to come.

In short, two damaging and connected economic experiments – with long term consequences – are being imposed on Scotland against our will.

First, we have been removed from the European Union and single market – a step that is now accepted and endorsed by all the main UK-wide parties.

Second, a low tax, low regulation approach to the economy – grounded in ‘trickle-down’ economic theory – is being imposed upon us. This is being driven by the UK Government’s desperation to find some so-called ‘benefit’ of Brexit, and counter its negative economic impact. It is an approach with little or no evidence of success – on the contrary, experience tells us it is likely to undermine equality and sustainability, and contribute to further political instability. And yet, the differences between the UK-wide parties on these matters is often more apparent than real.

The consequences of all of this for Scotland – if we stay part of the Westminster system – will be damaging and long lasting.

We believe there is a better way. A way that meets the aspirations of the people of Scotland: taking economic powers into our own hands, so we can tailor policy to Scotland’s needs; build greater equality and wellbeing; and become more resilient to, and, when necessary, better able to respond to, global challenges such as the current energy price shock.

This won’t happen overnight, or without hard work. Recent developments in the UK economy and financial markets underline the imperative of acting with responsibility, careful consideration and good planning, and remind us of the real-life consequences of not doing so.

However, in this economic prospectus we set out how it can be done. We consider issues of transition; financial institution-building; and the need to be fiscally credible and maintain market confidence, not least in the process of establishing a Scottish pound. We outline the choices available to any government of an independent nation, and detail some of the choices the current Scottish Government, with access to full economic powers, would make as we seek to build a country that is more prosperous, sustainable, fair and equal.

Our guiding principle is that economic dynamism and social solidarity – growth and greater equality – go hand in hand. We recognise economic policy is a means rather than an end, to help people live happy, healthy, fulfilling lives.

People are at the heart of the vision we set out: from the need to grow our population, boost incomes, and involve workers in decisions that affect them; to our plans to invest in people’s futures and provide the security they are entitled to.

This people-centred approach reflects the reality that, ultimately, whether or not we succeed as a nation is not a given, but will depend upon all of our talents and the decisions we make.

The proposals we set out in this publication include:

  • re-joining the European Union (EU) to benefit from, and contribute to, the vast European Single Market
  • a redesigned energy market, that aims to provide secure and reliable low cost energy
  • greater workplace security and an end to age discrimination in minimum wage setting, and
  • a migration policy designed to boost Scotland’s working population.

To build confidence in our ability to move from a low growth, high inequality UK that is outside the EU, to a fairer, more dynamic independent economy, we must also set out how we will manage, in a way consistent with building a stronger, fairer country, the fiscal situation we inherit; what currency we will use; and how, as we return to the EU and single market, we will also protect trade with the rest of the UK. We set out here a clear approach to those issues.

As one of the choices the current government would make, we propose a special independence investment fund – the Building a New Scotland Fund – to boost growth, accelerate our transition away from fossil fuels, and deliver long-term social benefit.

We would use new powers and access to resources – including ‘windfall’ proceeds from oil prices that are likely to remain relatively high in the period ahead – to spend up to £20 billion in infrastructure projects to, for example, build and renew homes to decarbonise Scotland’s housing stock, cut fuel bills and reduce fuel poverty.

This publication is far from the last word on the matter. Later in the Building a New Scotland series, we will address in further detail sectors such as agriculture, fisheries and energy as well as European and migration policy.

And we welcome all contributions to the debate on how we can build a better country for everyone who lives here.

The Rt Hon Nicola Sturgeon MSP First Minister of Scotland



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