Scotland’s 2016-17 fiscal deficit falls to 8.3% from 9.3% in the previous financial year; still pretty huge

Government Expenditure & Revenue Scotland (GERS) 2016-17 was published this morning. It shows that in 2016-17 Scotland’s notional net fiscal deficit was 8.3%, down from 9.3% in 2015-16. The UK’s deficit for the same period was 2.4%.

The figures also show that non-North Sea oil and gas revenue increased by 6.1% on the previous financial year, and that public spending in Scotland is £13,175 per person, £1,437 per person greater than the UK average.

We reported back in May on experimental statistics by the ONS showing how Scotland compared with the other nations and regions of the UK in terms of public spending deficits. The Fraser of Allander Institute referred to this data in its analysis of GERS today, noting that “[t]he key reason for Scotland’s ranking behind other parts of the UK is not because of lower revenues, but higher levels of spending. Indeed only London, the South East and the East of England are estimated to raise more revenue per head than Scotland.” Scotland is second only to Northern Ireland in terms of public spending.

As for the next few years, the Fraser projects that Scotland’s deficit will be at around the 7% mark by 2020-21.

Finally, on the notion that GERS is unreliable, Dr Graeme Roy, Director of the Fraser of Allander Institute said the following1:

Some have dismissed GERS as it relies, in part, on estimating some Scottish tax revenues. This is unfair. All economic figures are subject to a degree of estimation, including GDP and unemployment statistics. So estimation is not unusual. Furthermore, radically changing the estimation techniques do not alter the headline conclusions of GERS.

It is important to remember that GERS takes the current constitutional settlement as given. If the very purpose of independence is to take different choices about the type of economy and society that we live in, then a set of accounts based upon the current constitutional settlement and policy priorities will tell us little about the *long-term* finances of an independent Scotland.

But GERS does provide a pretty accurate picture of where Scotland is in 2016-17. In doing so, it sets a useful starting point for a discussion about the immediate choices and challenges that need to be addressed by those advocating further constitutional change.

All countries face big fiscal challenges in terms of what will replace declining revenues in the face of rising spending pressures over the next few years. Changing the constitutional set-up doesn’t alter the fact that these fiscal challenges need to be addressed by all governments in all countries. But a more autonomous Scotland will be forced to meet such challenges sooner rather than later.

Fraser of Allander Institute publishes latest GVA growth predictions

The Fraser of Allander Institute has published forecasts for growth in the Scottish economy over the second and third quarters of 2017:

GVA growth in 2017 Q2 is estimated to be 0.49% which, at an annual rate, is 1.98%
GVA growth in 2017 Q3 is estimated to be 0.40% which, at an annual rate, is 1.62%

They add: “[W]e note that the UK economy — which had a surprisingly strong 2016 — has weakened in recent quarters. This will have an implication for Scottish trade with the rest of the UK and may therefore dampen growth in Scotland through 2017.”

Trains approaching?

By Alistair Heather

Puir infrastructure is a belt aboot Scotland’s thrapple. Oor roads are pithailed anachronisms. Boats tae the isles are auld an dear. Fleein tae ony airt ither than London gars ye travel tae the ane o the central belt aeroports, doublin the cost an time o ilka journey. Scotrail is a mixter-maxter o the sorry an the sublime. On ae haun there’s a braw new electric service breengin atween Embra an Glasgae. On the ither haun ye hae twa-carriage vintage trains rattlin aroon an aboot the hielands, gangin nae place fast. No ainly is infrastructure puir, but infrastructure inequality is severe an growin worse ilka year. Gin ye want tae gang onywhaur in Scotland north o the Forth, by car, sea or rail, it’ll be slaw an it’ll be dear.

The effects o this are extreme. Hail sections o Scotland are economically uninhabitable.

Ane o the worst effected airts is the Buchan. The Broch. Peterheid. Buckie. MacDuff. Big touns thrang wi culture, business an potential, cut aff fae mercats an cities by an infrastructure that’s oot o date by decades.

A solution is chuggin reekily owre the horizon: the Buchan railway line. There aince wis a line linkin aa the North-East tae the rest o Scotland, but it wis torn oot by Beeching in his cuts. Nou the clash is a reinstatement is possible. The SNP are getting ahint the idea. It has grassroots support.

Whether it’d be a full relaying o the auld 57-mile track that linked Peterheid an the Broch wi Dyce, or some new configuration, isnae yet set in stane. But whit is gey clear tae the maist blindit o een is the sair need in the area for a train line.

The fowk o the Buchan are haein tae thole gey sair times the nou, in the wake o the oil crash an the decline o fishin. Unemployment is a huge issue. The nummer o fowk needin a haun fae the state rose by 97.5% in 2016. The lack o ony ither employment opportunities in that airt means that thae fowk wha are dumped oot on their dowp efter years o guid wark in the oil an gas industry arnae likely tae finn new posts ony time soon. The unemployed are mair nor likely tae be hail, hearty men atween the ages o aboot forty an saxty, an skilled warkers intae their sectors. Ae muckle barrier tae wark wis that thay juist coudnae gang intae Aiberdeen for tae finn wark or mak contacts; it wis juist owre far. Nou, ye’re mibbie ainly spikkin aboot forty mile or so, but on thae totty wee roads, wi their ferm clart an tractors blockin yer run, it micht weel be twa hours tae drive. It’s fower hours an twenty quid return on the bus.

So aa these gey talented lads, richt in the middle o their warkin lives, are bein left tae rot in the fields like unhowkit tatties, their skills deid tae the economy o Scotland.

An exaimple fae near at haun shaws us clearly the benefits o a train line.

Ballatar an Braemar are baith Cairngorm conurbations. Baith were on ane o the vital routes through the Cairngorms an therefore hud every reason tae be a vibrant economic hubs. In the nineteen-hunners a trainline wis planned, tae link Braemar tae Aiberdeen. Construction got sae far as tae big a railway station at Braemar, a biggin that stauns there yet.

But then intae this natural development cam big Queen Vicky. She bocht Balmoral Castle, an a guid skelp o the laun thereaboot. She soon cam tae ken that the new railroad wad gang richt by her new front door. So the train wis stapped at Ballater, saxteen mile doun the road. Braemar was left tae stew in parochialism.

The difference atween the twa touns — ane wi a train station durin a century, the ither withoot — coudnae be mair marked. The population o Ballater is double that o Braemar, its tourism infrastructure is weel-developed an it has a relatively diverse economy.

The tearin up o the North o Scotland railroads pit a stap tae Ballater’s development, but the tale o the twa touns is a usefu fable for unnerstaunin the importance o infrastructure in rural areas.

There is a braw modren test-case for rebiggin the Buchan railway line: The Borders Railway. The Borders line rins fae Embra doun tae Tweedbank, juist ayont Galashiels. The area wis ane o the maist disconnectit in Scotland, wi a hirplin tourism industry an prohibitive travel costs. Busses tae Embra took owre twa hours, but this train taks unner ane. This situation is mirrored by the Broch an Aiberdeen.

The economic impact o the Border Railway has been staggerin. Owre a million passengers in the first year — 350,000 mair than expectit — an a huge shot in the airm o local businesses. The Scottish Tourism Economic Assessment Monitor (STEAM) figures for the Borders efter the biggin of the railway were aa fantastically positive; a 27% increase in visitors steyin at hotels an B&Bs. 20% mair spent by visitors on bevvy an scran. Aa across the board nummers are heized up.

There’s naebody doun there scratchin their heids speirin whaur aa this new money cam fae. thay ken fine. “The introduction of the railway has undoubtedly contributed” tae aa this growth, says Stuart Bell fae the Borders Cooncil.

The Buchan needs this railway like it needs its neist breath o air. The belt o 19th century infrastructure needs lowsed aff the thrapple o the North-East.

The Transport Minister, an indeed aabody in the SNP leadership maun pit their shooder tae the wark an mak absolute certain that this project comes tae fruition. A new trainline will be the artery, pumpin the lifebluid o cash an fowk tae the Buchan hertlands that’s sae sairly needit. Wi’oot it? It’ll be yet anither toom airt, anither Ross, anither Cairgorms, anither bleak wasteland that aince supported life but nou ainly exists for grouse shoots an postcairds.

James McDonaldAlistair Heather is the Scots Editor at Bella Caledonia. He studies History an French at Aiberdeen University, an warks wi the Elphinstone Institute promotin the culture o the North-East. Gie him yer chat @historic_ally on Twitter.

Selected glossary

Scots English
aince once
airt place
ane one
bevvy an scran drink and food
biggin building
bocht bought
dowp buttocks
gars ye forces you to
heized up risen
hirplin limping
ilka each
mixter-maxter a jumble
neist next
speirin questioning
thrang packed
thrapple throat

Pit astronomy heich up in the Scots eddication seestem

Editor’s note: many thanks to James for Discourse.scot’s first article in Scots. You can read about the rich history of Scots, and explore its vocabulary, over at the Dictionar o the Scots Leid website. There’s also a selected glossary at the end of this post. Happy reading. JS.


By James McDonald
We can read this Thursday in The National that Scotland coud be the place for the rapplin space industry by the wey o Tom Walkinshaw o technology firm, Alba Orbital. We can read an aw that space technology firms fae Scotland is developpin new technology, wi Alba Orbital developpin the lichtest, cheapest, an peeriest sattelite aroun.

Anither newins tae dae wi the Scots space industry, the possibeelity o a spaceport, wis proponed an aw, bi Commonspace. This idea wis descreived as “science fiction” bi Adam Tomkins, Tory MSP. But this is in maugre o the first spaceport bein biggit in Kazakhstan in 1957 (on lease tae Roushie syne Kazakhstan’s wanthirldom in 1991) an twa new yins biggit juist last yeir, in Roushie an Cheena. Sae it’s mair tae be science fact. An Scotland awready haes its ain space industry, becomin sonsier an sonsier, as Commonspace pynts out.

An Scotland investin in its space industry wad be a braw idea, in ma view, for a hantle raisons. The investment wad forder a industry that, forrit an ayont, coud be crucial for the hale o Jock Tamson’s bairns. It wad create jobs that fowk coud actually be greeshochie anent an aw. An, on tap o that, it wad pit Scotland at the forebreist o innovation, as it’s afttimes been.

But whit can be daen for tae forder this industry?

Och, the state o the economy is relevant: a economy that isnae diverse eneuch, a economy that isnae even biggin the components for caurs, willnae can produce a major space industry. Anither relevant element is the financial an infrastructure investment fae the govrenment. An the encouragement or discouragement hings on whaur individuals an firms is makkin thair efforts an aw: whiles, in ony domain, ye juist need the yin-twa eydent buddies for awthing tae gang fae naething till something.

But hou can thae eydent buddies even hae thair ideas, gif thay dinnae learn anent thaim? Och, it’s possible that thay can gang awa thairsels an learn things aw bi thairsels. An that comes o some fowk. Some fowk juist learn things on thair ain. An that is a rare thing. This kin o willint naitur can an should be upsteert. But awbody isnae sic a aiver learner. An, even for the fowk that learns on thair lanesome like that, thay dinnae necessarly finn the swecht for tae resairch thair favourite topic on thair ain: thay found the topic through fowk shawin it tae thaim, wis interestit in learnin mair about it, an then gaun awa an learnt about it.

Hou can we git fae wir present knawledge o an interest in astronomy in Scotland tae a generation wi mony buddin astronomers?

Ma idea is tae pit astronomy heich up in the curriculum. The idea that astronomy shud hae a place in the curriculum is supportit bi the journal airticle Teaching Astronomy: Why and How?

Afore leukin at alternatives, we’ll see whit astronomy lessons is like in Scotland awready. Thir days, there a fair differ aqueish astronomy in Scots heicher eddication an eddication afore that: scuils pit astronomy as pairt o pheesics, while universities gie it its ain place. This is true in general; outthrou different kintras, there is mair availability o astronomy at universitie level than at scuil level. At the moment, there isnae a National Qualification for astronomy though there a pheesics unit that is anent astronomy, an it is guid that there is something.

Obviously, we can say astronomy is pairt o pheesics. But astropheesics is in fack juist the ae subdiscipline o astronomy; there is forby ither owerlaps wi ither subjecks: astrobiology, astrochemistry, even archeoastronomy, as weel as ither domains athin astronomy, like celestial mechanics, pheesical cosmology an planetary science.

Turnin tae ither times an places, we can see that there wis or is mair astronomy lessons. In auncient Greek scuils, astronomy wis gien date an gree amang scuil subjecks. In the Pythagorean scuil, for insaumple, it wis yin o the major subjecks.

Nou that we recognise the importance o space traivel an the propines it can bring us, it should be mair important, no less. Thir propines can range fae the space traivel itsel (for tae hae the potential tae can stairt colonies on ither planets some day) tae technology developpit bi NASA, an then transfert tae Earth uise, like artificial limbs amang ither innovations. Sae we should, by wey o it, be mair interestit in space than the auncient Greeks were.

Nou tae leuk at anither kintra, in pairts o whilk astronomy is awready heich placed in the curriculum. That kintra is East Germany, whaur there wis obligator astronomy clesses fae 1959 on. This is true yet in fower o the five Eastern Länder (states): Mecklenburg-Vorpommern, Sachsen-Anhalt, Thüringen an in Brandenburg. Famous astronomers like Martin Fiedler, Jens Kandler, Maik Meyer, André Knöfel, Lutz D. Schmadel an, maist notably, Thomas Henning, wha wirks as director at the Max Planck Astronomy Institute (Max-Planck-Institut für astronomy) is aw astronomers that haes been through the East German seestem wi astronomy lessons. The situation in Eastern Germany wad obviously no be replicate like for like in Scots scuils, wi the wey Scots scuils is mair intae chyce, but we cud offer mair aften the chyce tae learn the astronomy.

In Scotland, whit we coud dae is eik astronomy intae Scots scuils as a separate subjeck, leastweys at Higher level. Obviously, we cannae gang straucht fae nae teachers specialisin in astronomy tae aw the scuils haein thaim. There wad need tae be a hauflin process through whilk things wad temporarily gang.

On tap o that, anither thing we need tae think on is the wey in whilk fowk learn. This is important an aw: we wad aye want tae teach it richt, an in a wey that forders a gey wheen o the pupils tae continue in the field. As Neil deGrasse Tyson says:

“I would teach how science works as much as I would teach what science knows. I would assert (given that essentially, everyone will learn to read) that science literacy is the most important kind of literacy thay can take into the 21st century. I would undervalue grades based on knowing things and find ways to reward curiosity. In the end, it’s the people who are curious who change the world.”
― Neil deGrasse Tyson

Sae we can see that the feelin o wonder for the warld, an the promuivin o whilk, is fundamental tae the forderin o society.

Anither quote o his is the follaein:

“I am trying to convince people — not only the public, but lawmakers and people in power — that investing in the frontier of science, however remote it may seem in its relevance to what you’re doing today, is a way of stockpiling the seed corns of future harvests of this nation.”

Och, he’s talkin anent the Unitit States in yon statement, but it isnae less true for Scotland or ony ither place.

Sae, aw in aw, astronomy wad be benefeicial gin it’s for the future o humanity or for the future o Scotland’s space industry, or Scotland’s economy mair generally, or the potential inventions, or ony ither raison. An that’s hou A wad think that it wad be braw gif we coud see astronomy pit heicher up in Scots scuils. An teach in it in a wey that fowk can be inspired by.

James McDonaldJames McDonald is a Scots polyglot steyin in Réunion. He is keen on different leids, inspecially local leids, an thair forderin, whether it’s Scots, Gaelic, Réunion Creole or ither leids. He wirks in scuils, helpin bairns wi thair hamewirk an giein chess lessons. Ye can contack him on jmcd89 [AT] googlemail [DOT] com.

Selected glossary

Scots English
aiver eager
anent about
aqueish between
eydent industrious
eik add
forebreist forefront
fowk people
gif if
greeshochie enthusiastic
hauflin intermediate
heicher higher
och An exclamation of peremptory dismissal of a subject (can also be exclamation of weariness, oh!, alas!)
peeriest smallest
promuivin promoting
propone to propose (as a question for discussion)
sonsier an sonsier Becoming ever more prosperous
upsteert encouraged
wanthirldom independence
whiles sometimes
yin-twa a few

Aberdeen “worst hit” by hard Brexit, experts predict

BBC, today:

Aberdeen could be the city worst hit by falling economic output due to a “hard” Brexit, experts have predicted.

A new report from the Centre for Cities and the Centre for Economic Performance at the London School of Economics said all cities would see a fall in output due to increasing trade costs.

Aberdeen and Edinburgh were both ranked among the ten most affected cities.

However, the study said both cities are also among the best-placed to respond to any predicted economic turbulence.

The full report can be read here.

Most and least affected cities (% change in Gross Value Added)
Most affected cities (% change in Gross Value Added). Source: Centre for Economic Performance analysis, 2017. From report Brexit, trade and the economic impacts on UK cities (figure 3, page 5)

 

House of Lords urges differentiated solution for Scotland in Brexit

From “Chapter 5: Scotland” of the UK parliament’s House of Lords European Union Committee report on Brexit and devolution, published today:

We conclude, on the basis of the weight of evidence submitted to this inquiry, that the Scottish Government’s further proposal, for continued Scottish membership of the Single Market, through the European Economic Area, while the rest of the UK leaves the Single Market, is politically impracticable, legally highly complex and economically potentially disruptive to the functioning of the UK single market.

Nevertheless, we urge the Government to respect the particular circumstances in Scotland. While we acknowledge that the referendum was a UK-wide vote, giving a UK-wide result, the Government needs to recognise the fact that the vote to remain in Scotland, at 62%, was the largest and most decisive (either in favour of remaining or leaving) in any nation of the UK.

We therefore consider that, in the event that the UK Government does not secure a UK-wide agreement that adequately reflects Scotland’s specific needs, there is a strong political and economic case for making differentiated arrangements for Scotland.

The Scottish economy has particularly pressing needs, including its reliance on access to EU labour, which is acute in sectors such as health and social care, agriculture, food and drink, and hospitality. We also note Scotland’s demographic needs, and its reliance upon EU migration to enable its population (and in particular, that of working age) to grow. Scotland’s more sparsely populated regions are disproportionately reliant both on EU migration and EU funding. Many of our witnesses argued that the most pressing case, in view of Scotland’s economic and demographic circumstances, would be for a standalone approach to immigration policy. We address this issue in the next chapter.

Our witnesses have also suggested that differentiated arrangements could be reached in fields such as energy policy, justice and home affairs cooperation, participation in Europol, access to EU structural or research funds, participation in such programmes as Horizon 2020 or Erasmus, reciprocal healthcare provision, workers’ rights and working hours, and agriculture and fisheries.

Finally, we reiterate that maintenance of the integrity and efficient operation of the UK single market must be an over-arching objective for the whole United Kingdom. But that objective does not preclude differentiated arrangements for Scotland in some areas, and nor does it justify excluding the Scottish Government from the Brexit process. […]

Scottish economic growth outperforms expectations in the first quarter of 2017

Scottish GDP grew by 0.8% in the first quarter of 2017, averting recession following a 0.2% contraction in Q4 2016. Scotland’s 0.8% growth compares with 0.2% in the UK as a whole, 0.4% in the United States, and 0.6% in the euro area1.

Scottish GDP, quarter-on-quarter and annual percentage change

The other main points from the government’s latest GDP publication:

  • Scottish GDP per person grew by 0.7% during the first quarter of 2017.
  • In the first quarter of 2017 services in Scotland grew by 0.3% and production grew by 3.1%, while construction contracted by 0.7%.
  • Compared to the same period last year (i.e. 2017Q1 vs 2016Q4), the Scottish economy grew by 0.7%. Equivalent UK growth was 2.0%.

Contribution of industries to Scottish and UK GDP growth, 2017 Q1

The Fraser of Allander Institute (FAI) offered some key reasons for the significant growth in the production sector:

  • Firstly, the figures show a substantial rise of over 7% in metals manufacturing, driven in part by the re-opening of the Dalziel steel plant.
  • Secondly, as our latest Oil and Gas survey highlighted, there has been a growing return to confidence in the oil and gas supply chain. The data published today appears to indicate that this has actually now translated into a welcome degree of bounce-back in actual activity within the sector.
  • Thirdly, the figures report massive growth of over 12% in refined petroleum output which is largely output from Grangemouth. We’d urge caution with this series as it’s especially volatile […]
  • Finally, other sectors of manufacturing have also bounced back from a weak 2016. Food and drink for example, also grew strongly by historical standards.

The FAI on longer-term performance:

[…] [I]f Scotland can — over the remaining three quarters of 2017 — secure its average quarterly growth rate of 0.35% then this will bring in 4Q-on-4Q growth over 2017 of 1.2%. Identical to our June forecast.

July Fraser of Allander Institute nowcast suggests recession may have been averted

The latest Fraser of Allander Institute nowcast suggests that a recession in the Scottish economy, following a 0.2% contraction in GDP in Q4 of 2016, may have been averted (caveats—described in the FAI post—apply):

Looking forward, our model currently estimates growth in 2017 Q1 of between 0.2% and 0.3% and a similar rate for Q2.

The information that we have therefore — and comparing such data to historical trends — suggests that the economy has been growing during the first six months of 2017 (albeit below trend).

The latest estimates from the ONS indicate that the UK economy as a whole grew by 0.3% in Q1 of 2017.

Official figures for Scotland will be published on Wednesday.

Update

The FAI has also published its latest Royal Bank of Scotland Scottish Business Monitor results. In summary:

The results from the Royal Bank of Scotland Business Monitor suggest that the Scottish economy grew in the 3 month period to the end of June. This offers some signs that Scottish businesses are remaining relatively resilient in the face of challenging trading conditions.

More encouraging is the outlook, with a greater proportion of businesses expecting higher levels of activity in the second half of the year. Inflationary pressures remain strong however, and this will act as a drag on some sectors. Others, particularly tourism and exporters will continue to see opportunities from the low value of Sterling.

Scotland’s economy edges close to recession — but growth forecast to return in the coming months

The Fraser of Allander Institute (FAI) published its latest Economic Commentary yesterday. You can read it here. The main points from the press release:

  • With the Scottish economy shrinking in the final three months of 2016, Scotland is just one data release away from re-entering recession (defined as two consecutive quarters of falling output) […].
  • However, the Institute forecasts that the Scottish economy will pick-up in 2017, although its central forecasts for growth of 1.2% in 2017, 1.4% in 2018 and 1.6% in 2019 are below trend with Scotland likely to continue to lag behind the UK as a whole.
  • The Institute’s new analysis finds that Scotland’s recent economic woes can no longer be explained just by the downturn in the North Sea or indeed by Brexit. Instead, Scotland’s economy seems to be stuck in a cycle of weak growth, declining confidence and poor investment and net export figures.
  • With Holyrood’s Budget now much more dependent upon the relative performance of Scottish tax revenues, getting the economy moving again must be a priority for everyone with a stake in Scotland’s long-term prosperity.

FAI director Graeme Roy added:

“What has been surprising is how little the economy has featured in recent policy debates in Scotland — including in the General Election. With Holyrood now responsible for over £11bn of income tax revenues, it is vital that politicians from all sides come forward with practical policy initiatives that will support businesses, secure new investment and create jobs whatever the constitutional settlement.”

In the “Economic Perspectives” section of the Commentary, David Eiser looks in detail at the new fiscal powers being devolved to the Scottish Parliament as part of the Fiscal Framework agreed in 2016. These include, since April of this year, responsibility for a large proportion of income tax revenues (with some exclusions, such as the personal allowance), and from 2018 complete control over Air Passenger Duty. Then in 2019 the Scottish Government will start receiving half of VAT revenues raised in Scotland.

The report includes a nice summary of the various devolved taxes:

Fraser of Allander Institute: Devolved, shared and assigned tax revenues in Scotland
Source: Fraser of Allander Institute Economic Commentary Vol 41 No 2, June 2017 — Table 1, page 27.

Growth figures for the first three months of 2017 are due to be published on 5 July.

Backing Scotland’s Currency — Foreign exchange reserves for an Independent Scotland

Common Weal has published a new white paper, “Backing Scotland’s Currency — Foreign exchange reserves for an Independent Scotland”, authored by Peter Ryan. From the preface:

The successful management of an independent country’s currency is often tied to its ability to raise and maintain an adequate level of foreign currency reserves. These reserves would be used to stabilise the currency’s exchange rate, protect against speculative attacks on the currency and service debt obligations, amongst other uses. In the case of Scottish independence, it will be important to show that sufficient reserves can be established quickly enough after the launch of a new currency to ensure its stability. It is the purpose of this paper to demonstrate that this proposal is viable.

Ryan reckons that approximately $40 billion (20% of GDP) could be raised to support an independent Scottish currency. Denmark similarly holds in the region of 20% of GDP in foreign exchange reserves1. He estimates that the costs of servicing the debt would be around $70.2 million annually, which is “substantially less than the current annual contribution by Scotland to the UK’s foreign reserves (£500 million per year) which are being built up by the UK government to bail out the City of London in the event of another crash.”

From The National’s reporting of the paper:

Dr Jim Walker, chief economist of Asianomics, said while it was “absolutely correct” that an independent Scotland could raise $40bn in foreign reserves, it was also “absolutely unnecessary”. He described the Common Weal report as a “well-thought-out contribution”, but said many successful independent countries had levels of reserves considerably smaller than 20 per cent of GDP.

“The Czech Republic, until the last two years, had historically a substantial current account deficit making the currency much more vulnerable,” he said. “For Bulgaria that was also historically true but not in the last decade. However, these reserve levels [at 40 per cent GDP] are a result of past deficits. Scotland would run a large surplus.

“Two ‘small’ non-European players with open capital accounts and free-floating currencies, Australia and New Zealand, maintained reserves of 4.5 per cent of GDP and 10 per cent of GDP, respectively, for 2016.

“There is absolutely no need [for an independent Scotland] to be aiming at a 20 per cent of GDP reserve level.”

Peter Ryan’s previous paper, “How to make a Currency — A Practical Guide”, may also be of interest.