Scotland Should Stay

What problem, exactly, is independence supposed to fix?

Scotland's referendum on independence is too close to call, according to recent opinion polls. Voters in Scotland are tempted to follow their hearts on Thursday in a joyful affirmation of self-rule, and irrevocably unravel the 1707 Act of Union. If they do, they'll be making a mistake.

One new poll shows 54 percent support for the "yes" vote on independence, compared with 46 percent backing for the "no" vote, excluding undecided voters. Three other weekend polls put the pro-union campaign a little ahead. The margin of error in polling means the outcome could go either way.

QuickTake Scotland's Independence

In a dangerous and unstable world, the ties that bind nations should not be broken without good cause. The independence campaign has failed to make the case. Granted, the pro-union campaign was worse -- slow to get started, and feeble once it did -- but those who want to overthrow the status quo, with all the costs and risks that any such constitutional revolution entails, must bear the burden of proof.

The independence campaign has blithely dismissed vital questions, such as which currency the new nation would use, whether European Union membership would truly be achievable, and what Scotland's share of the U.K.'s assets and liabilities would mean for its economic outlook. It dismissed these questions because it has no good answers.

Scotland would start its unhitched life with a budget deficit of at least 6.4 percent of gross domestic product, according to the Centre for Economics and Business Research in London. That would make fiscal austerity the first order of business for the newly independent nation. While the 3 percent limit demanded of euro members is something of a fantasy these days, those figures might also be used to blackball Scotland's EU membership aspirations.

The independence campaign says it doesn't want to use the euro: It would adopt sterling instead. That would be a very bad idea. The rest of the U.K. is unlikely to give Scotland a say in monetary policy. The Bank of England would set interest rates to suit England, Wales and Northern Ireland. In this crucial sense, Scottish independence would actually undermine Scottish sovereignty.

Doubts remain over how much revenue Scotland could earn from the energy reserves in the North Sea. The Office for Budget Responsibility, the U.K.'s independent fiscal watchdog, calculates that oil and gas production has declined consistently by an average of 7.8 percent a year since 1999. In July, the OBR cut its forecast for future receipts through 2040-41 by a quarter -- to 61.6 billion pounds ($99 billion) from 82.2 billion pounds. Uncertainty about prices, production and tax policy calls all such forecasts into question. The point is, this doubt argues against independence, because an independent Scotland has a smaller capacity to bear risk.

And what problem, exactly, is independence supposed to fix? In a sense, Scotland's First Minister Alex Salmond and his supporters have already won the battles that count. Scotland already sets its own course in education, offering free university tuition compared with the 9,000 pounds a year payable in England, and in health care with free medical prescriptions (which the English help to pay for). Moreover, the U.K. government is clambering to devolve more tax and spending powers, both in response to the independence movement and as part of a wider acknowledgment that more decentralization is desirable.

With the momentum toward devolution likely to accelerate, Scotland is in a position to gain control of its fiscal affairs without abandoning a relationship that has worked well for more than three centuries. Its politicians could tailor economic and social policies to suit local needs without the potentially disastrous distractions of balancing the books, managing its heightened dependence on oil, and seeking membership of an EU that is wary of setting a precedent for Spain's Catalonia and other discontented regions.

"I hope people will think very carefully about the future," Queen Elizabeth II said over the weekend. There's affection for the monarchy in Scotland, and the independence campaign has said that the queen will remain head of state in an independent nation. So it might not cause offense to say to Scottish voters that she's right. They should indeed think carefully. And having thought carefully, they should vote for the union.

--Editors: Mark Gilbert, Clive Crook

To contact the editor on this story:
David Shipley at davidshipley@bloomberg.net