The National:

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UNDER current plans, after a Yes vote, Scotland will use sterling. Without the ability to create new net financial wealth by issuing its own currency, it will instead rely on foreign capital by borrowing foreign currency or attracting Foreign Direct Investment (FDI). The end game is increased foreign ownership of Scottish companies.

During Thatcher’s premiership, the UK Government became agnostic, if not downright hostile, to UK ownership of British-based businesses. The current UK Government and the likely Labour administration on the horizon will not do anything to reverse this trend.

Thatcher and her advisers, especially at the Treasury, certainly supported "British-based" businesses, but it mattered little who owned them. This agnostic approach to corporate ownership across government even had a name: The "Wimbledon Effect".

The National: Wimbledon organisers are hoping to expand the grounds at the All England Club (Adam Davy/PA)

The Wimbledon Effect supported Thatcher’s ideology, built on her belief that public companies were terribly inefficient. Fewer British-owned companies meant fewer powerful unions, which was a handy bonus for Thatcher. Also, dropping financial support for British-owned businesses would help the Treasury "balance the books". Game, set, and match!

At the same time, the welcome mat was rolled out for foreign multinationals. Slowly but surely, more than just the UK's manufacturing base was being hollowed out; UK ownership across the economy was also shrinking.

READ MORE: From London to New York: Questioning the Scottish National Investment Bank's approach

A host of changes, especially within UK corporate governance law, made the UK the country where it was easiest to buy, break up, and sell a nationally owned business. The Wimbledon Effect meant Britain could create the playing field and attract the world's top talent. The riches generated here would "trickle down" or through the UK economy. It mattered little that Wimbledon was never won by a Brit, in the same way, that successful British-based companies were not British-owned.

To fully understand Thatcher's "anti-nationalist" approach, we must look at her advisers. Throughout the 1980s, a different breed of economists had been pushing out the old-school Keynesian economists. Those old boys had suggested governments should run deficits to support full employment, meaning fiscal expenditure was the go-to. As this theory was quickly replaced – it had been going out of fashion since the UK chose to accept loans from the IMF in 1976 – monetary policy became the principal way to manage the economy.

The models underpinning this monetarist approach left no room for public money or national sentiment. The rules had changed. The UK needed private money, not public money. Bank deregulation created a flow of private funds in the UK, and capital controls were removed to open the UK to foreign capital. If the UK wished to grow sustainably, it needed foreign investment to fill the gap left by the retreat of public money.

In sum, public money was downgraded in the 1980s. Private funds were encouraged, and foreign investment and ownership were prioritised. The belief was that foreign companies would only fully invest in the UK if they owned UK-based businesses.

The UK could use public funds but decided that private and foreign funds were superior. This all started in the 1980s but continues today.

Scotland now

AS we know, the Scottish Government does not create its own currency and has few borrowing powers. Because it needs more money to flow into Scotland, it uses its powers to attract foreign investment. It does this exceptionally well, outperforming every area in the UK except London in attracting FDI.

Capital wants a return, so more money must leave than arrives. There are obvious medium to long-term issues with such a reliance on FDI. As covered in some depth here, Scotland has lost more capital every year since the later 1990s – despite or perhaps because of the high level of FDI.

But without the ability to create public money – or new net financial wealth – the Scottish Government has to be greedy and try to soak up foreign funds: This is a practical reality for a currency user.

I am concerned that a future Scottish government will end up with a “Highlands Effect.”

After independence, according to the current Scottish Government "plan", Scotland will rely on foreign capital by borrowing foreign currency and attracting/encouraging FDI. I believe this will lead to a higher rate of foreign ownership of Scottish companies. Scotland has a small number of companies (less than 5% of UK companies) registered in Scotland. On a per capita basis, it should be over 8%.

So what will be on offer once this already small pool runs dry? Simple: Eyes turn to our natural resources. FDI will flood in to purchase Scotland's natural wealth. We are already seeing the effects of the "Highlands Effect". Here is a recent Scottish Government attempt to "encourage responsible private investment into peatland restoration". Last week, we covered the role of the Scottish National Investment Bank in promoting a similar £50 million investment.

The National:

After independence, Scotland could do things differently. However, the plan is to "grandfather" UK tax, finance, and corporate governance regulations. There is no plan to roll back any peculiar corporate governance laws that have supported the destruction of the UK's corporate base.

Without significant changes to current UK laws, after independence, Scottish companies will remain the corporate version of fast food: Cheap, readily available, and ultimately disposable.

Like fast food, FDI is a short-term fix that can quickly prove to be a very harmful addiction. Thatcher chose not to use the power she had, the ability to create net financial wealth, and the UK is still suffering the effects. Scotland will have a similar choice when we are independent. Issue or use a currency?

We must do all we can to persuade the Government to take the power to create new net financial wealth and use it from day one of independence.

*Article inspired by Aeron Davis's book Bankruptcy, Bubbles and Bailouts