Scottish exports to the remaining United Kingdom could slump by up to 80% over the next three decades if it votes for independence next year, Finance Minister George Osborne said yesterday.
Speaking at an energy conference in Aberdeen, the centre of Scotland’s oil industry, Osborne warned that the costs of independence could make Scotland 4% poorer over the next 30 years and make it over-dependent on volatile tax receipts from the oil and gas industry.
Scottish nationalists dispute that claim and argue a fully independent Scottish parliament could attract investment through lower taxes and could utilise oil revenues more efficiently.
Osborne - whose government opposes Scottish independence also spelt out Britain’s commitment to offer tax relief to oil companies facing the cost of shutting down ageing North Sea platforms.
“This commitment represents around 1% of UK GDP. It would represent around 12% of Scottish GDP. It’s for the Scottish government to explain how they would pay for that,” he said.
The government has commissioned a series of reports into the economic and legal ramifications of an independent Scotland in an attempt to sway public opinion before a referendum in September 2014.
Polls show about a third of Scottish voters want independence, while nearly 60% want to stay part of the United Kingdom.
The Treasury’s latest research shows that negative ‘border effects’ exist even when there is a free-trade agreement, drawing comparison with the Canadian-US border.
Scotland’s $190bn economy is roughly the size of New Zealand’s and makes up about 8% of the UK economy.
Big falls in Britain’s oil production, in decline since 1999, has held back the country’s economy in recent years and a shock tax rise in 2011 prompted dire predictions about the future of North Sea oil production.
New certainty over the level of tax relief for taking down platforms and pipelines, initially revealed by Osborne earlier this year and reiterated yesterday, could drive investment in North Sea oil and gas and help spur a revival, company executives said. “For companies who have been holding large numbers on their balance sheets for the liabilities, they can now hold that post-tax so it frees up their balance sheet to hopefully invest,” Peter Jones, managing director of TAQA’s UK oil business said. Investment in the industry is on the rise and is forecast to rise to a record £13.5bn in 2013.