Scottish Independence Depends on North Sea Oil

Scottish nationalists have long argued that being governed from London has deprived their country of its fair share of the wealth from Britain’s oil and natural gas fields, which mostly lie in North Sea waters off their shores.

“It’s Scotland’s oil” was the rallying cry in the 1970s that helped raise the profile of the Scottish Nationalist Party, which now leads the country and is pushing for a vote to secede in the referendum on Thursday. Alex Salmond, the politician leading the separatist movement, has pointed to North Sea energy as the treasure that would help finance an independent Scotland — ensuring that the country could continue the generous public spending, including free university tuition, that he is promising voters.

But North Sea energy revenue — even if the bulk of it went to a stand-alone Scotland, as is expected — would not be sufficient to justify such a big bet on the country’s economic future.

The approximately 5 billion pounds, or $8 billion, that the British government received in tax revenue from North Sea energy last year would have been the equivalent of only about 3 percent of the Scottish economy.

Scotland has many other industries working in its favor, including banking and financial services, textiles, whisky and tourism. They would continue to play their parts, although the big banks, Royal Bank of Scotland and Lloyds, have both indicated that they would move their headquarters to England if Scotland secedes, and some other multinationals might be harboring similar thoughts.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza