SETTING up a new independent Scottish state would cost £450 million over five years, according to analysis by Professor Patrick Dunleavy of the London School of Economics as part of the SNP’s Sustainable Growth Commission.
The report said most of these costs would be associated with establishing four new bodies: a defence force and associated defence ministry; a foreign affairs and trade department; a security and intelligence agency; and a central bank and financial regulator. These departments would employ 4100 extra civil servants, an overall increase of public sector employees of 1%.
It added the costs would be recovered within six years from additional taxation revenues, brought in through Scottish civil servants transferring back to Scotland from the rest if the UK.
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“Net economic impacts are positive and substantial, since the additional income associated with transferred employees exceeds costs, even in the transition period, with additional income to the Scottish economy of almost £226m per year and additional tax revenues of over £75m,” it said.
In terms of the deficit – the difference between public revenue and spending – the commission says the Government Expenditure and Revenue in Scotland (GERS) report provides “a helpful starting point” though is an estimate of public finances under the current constitutional arrangement.
It goes on to say “what is undoubtedly true is that the current position of the country’s public finances is an imperative for change rather than staying the same” and is “a reflection of the policies and structures that have created the scale of the estimated deficit as it stands, rather than on those that would seek to put it right”.
It says while the 2016/17 deficit is 8.3% of GDP, OBR forecasts suggests this would fall to 7.1% by 2021/22 – the working timescale taken in the report for when Scotland becomes independent. However, taking into account savings from defence and other UK policies Scotland would not contribute to, the deficit would fall to 5.5% of GDP by the first year of independence.
The “very conservative assumptions” as a result of the above the inherited deficit would be 5.5% of GDP in 2021/22.
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