No Norway-Style Oil Fund for an Independent Scotland, Niesr Says

An independent Scotland wouldn’t have enough money from North Sea energy to create the Norwegian-style oil fund promised by nationalists campaigning to leave the U.K., according to a report published today.

Based on forecasts for production and prices, the new state would need all the money to maintain spending on services and avoid mounting debt, the National Institute of Economic and Social Research said. To pay for a “modest version” of the fund, Scotland’s financial position would have to change, such as by cutting public spending or increasing taxes, it said.

“While some sort of post-independence ‘oil fund’ may be desirable, in order to counter fluctuations in North Sea related tax revenues, this analysis suggests that no ‘surplus’ revenues would be available to fund a Norwegian-style fund,” London-based Niesr said.

The report is the latest contribution to the arguments over whether Scotland should vote for independence in a referendum on Sept. 18. Scottish leaderAlex Salmond has said he wants North Sea energy resources to underpin the economy and maintain social spending, while Prime Minister David Cameron today said in a speech in London that Scotland is more secure economically and politically being part of a bigger country.

Scotland would have a 150 billion-pound ($245 billion) economy, when including a geographical share of North Sea oil, according to Scottish government forecasts. It predicts a budget deficit of no wider than 3.2 percent of economic output in 2016-2017, the first year of full autonomy.

‘Early Priority’

In its blueprint for independence unveiled in November, the Scottish government said it will make the creation of an energy fund “an early priority” to provide investment for future generations.

Niesr said North Sea oil companies are international, so it isn’t clear how much revenue would stay in Scotland.

The group also said Scots already have the higher standard of living promised by campaigners for independence based on calculations using gross national income. Adjusting for those figures also suggests Scotland was wealthier than previously recognized, the report found.

The Yes Scotland campaign for independence said in an e-mail it welcomed the report that suggests a current-account surplus and better prospects than the rest of the U.K.

A survey by ICM for the Scotland on Sunday newspaper published on Jan. 26 found 37 percent in favor of independence, up five percentage points from a poll in September. Those preferring the status quo fell to 44 percent from 49 percent. A TNS survey released a week later showed a 13-point gap, narrowing from 19 points in September.

To contact the reporter on this story: Rodney Jefferson in Edinburgh at r.jefferson@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net; Heather Harris at hharris5@bloomberg.net

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