The benefits of a Scottish yes vote

The list of catastrophes that would befall Britain in the event of Scottish independence continues to grow. If you believe the latest reports then money is being withdrawn from cash points around Scotland at a rapid clip, the next thing will be a plague of locusts.

Of course a vote for independence is not going to be a walk in the park. The issue of what currency Scotland is going to use remains a mystery, the market is still pondering the possibility of global investors ditching the rest of the UK on the back of such political uncertainty, which could cause a financial crisis akin to the bankruptcy of Lehman Brothers. Aside from economic questions, the UK’s standing in the world could be damaged if there is a win for the Yes camp.

However, once the country gets over its existential shock, could a Yes vote later this week actually be a good thing for Scotland and elsewhere?

Firstly, Sir Harry Burns, who stepped down as chief medical officer for Scotland, has said that a yes vote could be good for the Scottish public’s health.  He said that engaging more with local government, and making choices more easily for themselves could have a knock on impact on the health of the nation.

Although Burns argues that a yes vote could protect Scotland from Westminster’s growing calls to privatize some medical services on the NHS, it appears that Scotland’s top medical minds believe that feeling empowered actually has a health benefit.

To be a successful nation, one needs to be a healthy nation, so this could be one benefit of Scotland voting for independence.

The Thomas Piketty effect
The notion of fairness has come up time and time again during the referendum campaign.

The Yes campaign have talked about an independent Scotland becoming a more equal Scotland, also pointing out the growing wage gap between Scotland and the South-East of England, with Scottish wages significantly below those in and around London.

Inequality has become a bit of a hot topic lately, after leading economist Thomas Piketty, in his bestseller Capital in the Twenty-First Century, said that the developed world is returning to wealth disparities at Regency levels, which he says can stop mobility and damage growth.

Thus, if Scotland does vote for independence, and the politicians stick to their promise to make Scotland a more equitable country, then it could protect Scotland in the long-run as the rest of the UK struggles with weak growth and higher levels of social strife on the back of the growing gap between rich and poor.

Could an independent Scotland help the rest of the UK?
An independent Scotland could also have benefits for the other regions of the UK as it could propel a move towards a federal-type of government in the UK, akin to Germany and the United States.

Currently power is mostly located in Westminster; however, a push for de-centralisation on the back of a Scottish Yes vote could give the regions in the rest of the UK greater powers including tax raising capabilities and even the ability to raise money in the capital markets.

This could cut out levels of centralised bureaucracy, and if your local politicians are the ones who set, collect and spend taxes it could make them more directly accountable to the electorate.

De-centralised power could also make England more competitive, and it could re-generate some of the most sluggish areas of Britain, such as the North East. If Newcastle, for example, could set its own corporate tax rate below that of London, it could stand a chance at luring big business and talent away from the capital, which could bring some much-needed investment and regeneration to the area.

If Scotland votes No and the status quo continues, then London is likely to remain the beating heart of Britain, with some areas continuing to fade away.

This leads me on to the final point. If Scotland votes to break away on Thursday then many companies headquartered in Scotland have threatened to move south, such as Lloyds, Standard Life and Royal Bank of Scotland.

[Explained: Scotland’s currency options]

This could be good news for the British economy – more corporate tax take – and it could also boost border towns and cities, especially if these Scottish companies locate fairly close to their original homes, rather than making the move all the way down to London.

When it comes to referendums of this nature, the status quo bias tends to have the more compelling argument. However, some elements of the Yes campaign could have benefits not just for Scotland, but for the rest of the UK.
If inequality continues to grow in the UK, then at some stage it will reach a tipping point that could be bad for society and for our economy. Scotland has recognised this, the rest of the UK would be wise to follow suit.

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Kathleen Brooks is author of Kathleen Brooks on Forex, published by Harriman House.