Scottish Government Says Economy Stifled by U.K. Control

U.K. economic policy prevents Scotland from developing its strengths and is holding back a country that would be better off independent, the government in Edinburgh said in a report published today.

The cuts in spending by the past two U.K. governments, the boom in credit, the growth in income inequality, the failure to establish an oil fund for future generations, austerity and the decision to concentrate economic activity in London have all taken their toll, according to the report.

“The U.K. government’s economic policies have been holding Scotland back for generations,” Nicola Sturgeon, deputy first minister in Scotland’s semi-autonomous administration, said in the statement. “Only with the powers of independence can Scotland meet its full potential.”

The paper on the economy follows one yesterday from the U.K. Treasury on financial services, which said that an independent Scotland would have a banking system too big to save in the event of another crisis and might lack the resources to protect depositors. Scotland will hold a referendum on independence on Sept. 18, 2014, with polls showing more people want to keep the status quo than leave the U.K. by a margin of about 20 percentage points.

Scotland has generated more profit per head of the population than the U.K. as a whole for each of the past 30 years, Scottish First Minister Alex Salmond said in an e-mailed statement today.

‘Natural Advantages’

“We have a vast array of human, financial and natural resources, which many other countries do not enjoy,” Salmond said. “Despite all of these inherent economic strengths, Scotland’s long-term economic growth has lagged behind that of comparable European nations, many of which do not have the natural advantages we do.”

Scotland has the potential to be an economically successful independent nation, with strengths in life sciences, oil and gas, renewable energy, food and drink, financial services and other industries, Sturgeon said.

“The policies pursued by the Westminster government are not optimal for Scotland and are not fit for Scottish circumstances,” Sturgeon said. “Those policies have hindered growth, cost jobs and held Scotland back from pursuing policies best suited to our own economic priorities.”

Having control over spending would have meant the Scottish government could have protected 19,000 jobs lost as a result of cuts. Control of air passenger duty would have allowed it to attract more international flights and boost tourism, she said.

The Treasury paper was the third published by the U.K. setting out why it believes Scotland should reject independence. Chancellor of the Exchequer George Osborne said last month the prospect of an independent Scotland keeping the British pound as part of a formal currency union was “highly unlikely.”

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