Scotland Risks Economic Decline
World Economy

Scotland Risks Economic Decline

Scotland could find itself locked into a self-perpetuating cycle of economic decline unless it gets more powers beyond those currently on the table from Westminster, economists have warned.
The powers recommended by the Smith Commission on devolution require Scotland to live within its means without adequate power to grow the economy, independent economists Jim and Margaret Cuthbert said, STV reported.
In a paper for left-wing think-tank the Jimmy Reid Foundation, the economists say Scotland should gain control over more taxes, economic levers and the ability to exploit its own natural resources within a federal UK.
Summarizing the paper, the Jimmy Reid Foundation said: “They conclude that the income tax base is very different between Scotland and the rest of the UK.
“This means income tax is an unsuitable choice as the primary vehicle for giving the Scottish parliament greater fiscal responsibility.
“There is no adequate solution to what we have called the ‘gearing problem’, namely, the problem that arises when changes in UK in a tax which is devolved to Scotland are allowed to impact on reserved services like defense, which are for the UK as a whole.
“The Scottish government is being given responsibility for living within its tax resources, without being given adequate powers to grow the economy, and hence its tax base.”
It added: “A Scottish government operating under the proposed reforms will find itself severely constrained in its freedom of action, with the danger of Scotland finding itself locked into a self-perpetuating cycle of economic decline.


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