Research and analysis

Make sure you have the facts when you decide Scotland’s future - with references

Updated 21 August 2014

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Family walk in the countryside

Here are five ways we’ll benefit by staying in the United Kingdom.

1. Keep the pound.

The pound is one of the strongest and most stable currencies in the world. [footnote 1]’ [footnote 2] Staying in the UK is the only way Scotland can keep the strength of the Bank of England [footnote 3]’ [footnote 4] and the pound as we have now. [footnote 5]’ [footnote 6]’ [footnote 7]’ [footnote 8]’ [footnote 9]’ [footnote 10] Setting up a new currency for an independent Scotland would be costly and risky. [footnote 11]

2. More support for public services.

Currently, Scotland benefits from public spending per person that is around 10% higher than the UK average. [footnote 12]’ [footnote 13] Taxpayers across the UK help fund the vital public services we need such as health and education. [footnote 14]’ [footnote 15]’ [footnote 16] The long-term financial benefit of staying in the UK is worth up to £1,400 a year to each person in Scotland. [footnote 17]

3. One economy, more jobs.

Scotland trades more with the rest of the UK than with the rest of the world combined. [footnote 18]’ [footnote 19]’ [footnote 20] Hundreds of thousands of Scottish jobs are connected to trade with the UK. [footnote 21]’ [footnote 22] A new international border and a different currency system would make trade harder [footnote 23]’ [footnote 24]’ [footnote 25] and cost jobs [footnote 26]’ [footnote 27] at a time when the UK economy is recovering. [footnote 28]’ [footnote 29]’ [footnote 30]’ [footnote 31]

4. Cheaper bills.

The UK’s financial standing keeps interest rates low. [footnote 32]’ [footnote 33] That means cheaper mortgages and loans. [footnote 34] Plus our greater size makes household bills cheaper. [footnote 35]’ [footnote 36]’ [footnote 37]’ [footnote 38] Staying in the UK would keep future energy bills for Scottish households up to £189 a year lower. [footnote 39]

5. Best of both worlds.

The Scottish Parliament already decides important matters [footnote 40] like health and education [footnote 41], and more powers for Scotland are guaranteed. [footnote 42]’[footnote 43]’[footnote 44] And, as part of the UK family, we benefit by sharing resources and pooling risks. [footnote 45]’[footnote 46]’[footnote 47] By staying together, we can have more decisions taken here in Scotland [footnote 48]’[footnote 49]’[footnote 50]’[footnote 51]’[footnote 52] backed by the strength, stability [footnote 53]’[footnote 54] and security [footnote 55]’[footnote 56]’[footnote 57] of the UK.

Mother holds her baby

Independence means Scotland will leave the UK [footnote 58]’[footnote 59] - forever. [footnote 60] This is a big decision and every vote counts. Find out more at

gov.uk/youdecide2014

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This booklet is available in large print, audio and braille. Please write to: Scotland Office, 1 Melville Crescent, Edinburgh, EH3 7HW.

  1. “The pound is one of the oldest and most successful currencies in the world…. The value of the pound lies in the entire monetary system underpinning it. A system that includes the Bank of England and the tens of millions of UK taxpayers who stand behind that financial system”. Rt Hon George Osborne MP, Chancellor of the Exchequer, 13 February 2014 ↩

  2. “[T]he UK’s official holdings of international reserves, which consist of gold, foreign currency assets and International Monetary Fund assets. These reserves are maintained primarily so that the UK government’s reserves could be used to intervene to support sterling. The value of the Government’s reserves was $107 billion at the end of April 2014”. Statistical Release: UK official holdings of international reserves April 2014, HM Treasury, 6 May 2014. ↩

  3. “The Bank of England is the central bank of the United Kingdom…. the Bank was founded in 1694 with a founding charter that stated its purpose was to ‘promote the public good and benefit of our people’.” The Bank of England: About the Bank. ↩

  4. “Maintaining confidence in the currency is a key role of the Bank of England and one which is essential to the proper functioning of the economy.” The Bank of England: Banknotes. ↩

  5. “HM Treasury would advise the UK Government against entering into a currency union. There is no evidence that adequate proposals or policy changes to enable the formation of a durable currency union could be devised, agreed and implemented by both governments.” Scotland analysis: Assessment of a sterling currency union, HM government, February 2013, page 9 ↩

  6. “A formal sterling currency union is very different to the current arrangements and would be a profound economic change for both states. Both states would become exposed to fiscal and financial developments in each other’s economies.”… “The recent experience of the euro area has shown that it is extremely challenging to sustain a successful formal currency union without close fiscal integration and common arrangements for the resolution of banking sector difficulties.” Scotland analysis: Assessment of a sterling currency union, HM government, February 2013, page 8 ↩

  7. “An independent Scottish state could continue to use sterling as its currency without a formal agreement with the continuing UK. It would unilaterally adopt sterling, while the UK would not be required to change any of its institutions and policies, and the Bank of England may simply continue to operate with a focus on its formal area of responsibility (England, Wales and Northern Ireland) without taking account of economic conditions in the independent Scottish state.” Scotland analysis: Currency and monetary policy, HM government, April 2013, page 70 ↩

  8. The Chancellor has said that there will not be a currency union between the continuing UK and an independent Scotland. The Chief Secretary and the Shadow Chancellor have supported this position. “It would cost jobs and cost money. It wouldn’t provide economic security for Scotland or for the rest of the UK… sharing the pound is not in the interests of either the people of Scotland or the other parts of the UK.” Rt Hon George Osborne MP, Chancellor of the Exchequer, February 2014 ↩

  9. “As a Scot and as Chief Secretary to the UK Treasury… I couldn’t recommend a currency union to the people of Scotland.” Rt Hon Danny Alexander MP, Chief Secretary to the Treasury, February 2014 ↩

  10. “It would repeat the mistakes of the euro area…you’d be trying to negotiate a monetary union as Scotland is pulling away from the UK… Scotland will not keep the pound if Scotland chooses independence.” Rt Hon Ed Balls MP, Shadow Chancellor, February 2014. ↩

  11. “The introduction of a new independent Scottish currency would not require any negotiations with the continuing UK, beyond resolving the requirement for euro membership in any EU membership negotiations. There would be one-off transition costs due to the need to establish a central bank and replace sterling in circulation. There would also be a risk of rapid destabilising flows of money out of Scotland if Scottish residents preferred to hold their assets in an established currency….. The benefits of an independent Scottish currency would come at the expense of introducing higher transaction costs with all of Scotland’s trading partners, in particular with the continuing UK, Scotland’s neighbouring state and major trading partner. The current similarity of economic structures and performance and strong integration between Scotland and the rest of the UK means that relative to current arrangements the benefits of an independent monetary policy would be unlikely to outweigh these costs.” Scotland analysis: Currency and monetary policy, HM government, April 2013, page 9. ↩

  12. “Scottish onshore tax revenues per person have been only slightly lower than the UK average since devolution in 1998. Over the same time period, public spending per person in Scotland has been around 10 per cent higher than the UK average” Scotland analysis: Macroeconomic and fiscal performance, HM government, September 2013, page 7. ↩

  13. See Appendix one, table 1 ↩

  14. “Scottish onshore tax revenues per person have been only slightly lower than the UK average since devolution in 1998. Over the same time period, public spending per person in Scotland has been around 10 per cent higher than the UK average” Scotland analysis: Fiscal policy and sustainability, HM Government, May 2014, paragraph 1.3, page 18 ↩

  15. “Spending in Scotland in 2012-13 (note this includes spending by the Scottish Government, UK Government, local government and local government public corporations): Health - £11.2bn, Education - £7.7bn.” Country and Regional Analysis 2013, HM Treasury, 9 December 2013, Table A21 ↩

  16. “Managing the fiscal effects of the benefits of natural resources and an ageing population are exactly the sorts of challenges that fiscal unions, such as the UK’s, are able to smooth over long periods of time. For example: differences in regional demographics; the benefits of windfalls in coal and oil revenues; and lower debt interest costs from low borrowing rates, have and continue to be shared across the UK. At various times in the history of the Union, different nations will have ‘paid in’ or ‘drawn out’. But over time, everyone is stronger for having the insurance and economies of scale that the UK’s fiscal union, large economy and credible institutions provide.” Scotland analysis: Fiscal policy and sustainability, HM government, May 2014, page 7 ↩

  17. “[T]he benefit for people in Scotland of remaining part of the UK – the “UK Dividend” – is worth around £1,400 per person every year over the 20 years from 2016 17. This is the amount that each person in Scotland would be better off by every year, from lower taxes and sustained public services as part of the UK.” Scotland analysis: Fiscal policy and sustainability, HM government, May 2014, page 1 ↩

  18. “Of total Scottish trade, a majority was made with the rest of the UK.” Scotland analysis: Macroeconomic and fiscal performance, HM government, September 2013, paragraph A3, page 90. Source for this data: Scottish Government, Scotland National Account Project 2013Q4 ↩

  19. See Appendix one, table 2 ↩

  20. “The rest of the UK is, by far, Scotland’s biggest economic partner. In 2011, Scotland sold goods and services worth £45.5 billion to the UK, double the levels exported to the rest of the world. It is also four times greater than Scottish sales to the rest of the European Union. Overall, exports to the UK represent 29 per cent of Scottish Gross Domestic Product but the importance of the UK market is even higher in some sectors. For example, financial and insurance services in Scotland sold nearly half their output in the rest of the UK in 2009.” Scotland analysis: Macroeconomic and fiscal performance, HM government, September 2013 p. 15 Source for this data is: Scotland’s Global Connections Survey 2011 ↩

  21. “[A]lmost 1 million jobs – 962,000 – depend on links to the rest of the UK. This is a clear indication, if anyone wanted one, of the extent to which the Scottish economy is integrated with the rest of the United Kingdom.” Scottish Jobs and the UK, Brian Ashcroft, Scottish Economy Watch, 3 June 2014 ↩

  22. “The [financial services] sector employs almost 100,000 people directly and around the same again indirectly.” Financial Services in Scotland, Fact, Scottish Financial Enterprise ↩

  23. “[E]ven if an independent Scottish state and the continuing UK were to enter a sterling currency union, a ‘border effect’ would still be likely to emerge which would reduce the level of real incomes in Scotland by 4 per cent after 30 years or £2,000 per Scottish household per year and £100 per UK household.” Scotland analysis: Assessment of a sterling currency union, HM government, February 2014, paragraph 2.6, page 22 ↩

  24. “The ‘border effect’ is the observation that trade is higher within countries than between countries. If in the long run, the border between an independent Scotland and the rest of UK border affects trade like the current border between the Republic of Ireland and the UK, then we estimate costs at 5.5% of Scotland’s GDP.” The border effect on trade between an independent Scotland and the UK, David Comerford, University of Stirling, 2 May 2014 ↩

  25. “If Scotland issued a new currency, then a further effect is likely to present itself through exchange-rate volatility. Dell’Ariccia (1999) finds exchange rate uncertainty has a small but significant negative effect on international trade between 15 EU states and Switzerland: the estimates find that total elimination of exchange rate variability in 1994 could have increased bilateral trade among these countries by between five and 12 per cent” Scotland analysis: Macroeconomic and fiscal performance, HM government, September 2013, Box 3A, page 55 ↩

  26. “Many thousands of jobs are connected to trade with the UK. Scotland’s key sectors currently have easy access to the majority of their customers in the rest of the UK, minimising the cost of doing business and helping to protect Scottish jobs” United Kingdom, united future: Conclusions of the Scotland analysis programme, HM government, June 2014, page 22 ↩

  27. “An independent Scotland’s financial sector would have to change: firms would either face higher costs and the challenge of holding on to the majority of their customers in the continuing UK; or, firms would choose to relocate. Either scenario is likely to make the Scottish financial sector smaller and could put Scottish jobs at risk” United Kingdom, united future: Conclusions of the Scotland analysis programme, HM government, June 2014, page 24 ↩

  28. “GDP figures reveal that the economy has grown at its fastest rate in six years…. ‘Today’s figures show that Britain is coming back - but we can’t take that for granted. We have to carry on working through our long term economic plan. For the first time in a decade all three main sectors of the economy - manufacturing, services and construction - have grown by at least three per cent in the last year.’” George Osborne, quoted in HMT statement, 29 April 2014 ↩

  29. See Appendix one, table 3 ↩

  30. See Appendix one, table 4 ↩

  31. See Appendix one, table 5 ↩

  32. “We estimate that an independent Scotland within a sterling currency zone would face long-run average borrowing costs of between 72 and 165 basis points over UK borrowing costs.” Scotland’s currency options, Angus Armstrong and Monique Ebel, The National Institute of Economic and Social Research, 8 October 2013, page 3 ↩

  33. “Various independent bodies forecast that an independent Scotland’s deficit in 2016-17 would be substantially larger than suggested by the current Scottish Government in Scotland’s Future. The most pessimistic scenario in Scotland’s Future predicted a deficit of 3.2 per cent of GDP, equivalent to around £1,000 per person. However, the independent bodies all forecast a Scottish deficit above 5 per cent of GDP, or around £1,700 per person. This difference, of around £700 per person, can be entirely accounted for by differing views on the prospects for tax revenues from North Sea oil and gas production.”Scotland analysis: Fiscal policy and sustainability, HM government, May 2014, Box IC, page 27 The table summarises forecasts of Scotland’s fiscal position in 2016-17: See Appendix one, table 6 ↩

  34. “Economists at the National Institute of Economic and Social Research (NIESR) have estimated that independent Scottish interest rates could be up to 1.65 percentage points higher than the UK’s. This would increase the cost of paying for Scotland’s borrowing but is also likely to be passed on to consumers in the form of higher interest payments on mortgages. Using this estimate, HM Treasury analysis suggests that as part of the UK mortgage costs are up to £1,700 lower on the first year of repayments alone for a 75 per cent loan-to-value ratio mortgage on the average Scottish house.” United Kingdom, united future: Conclusions of the Scotland analysis programme, HM government, June 2014, page 36 ↩

  35. “The UK has credible public finances and is able to borrow at a low cost. This helps to keep interest rates across the economy down, making mortgages and other financial products cheaper. Consumers in the UK can access a larger range of goods and services at lower prices because of the scale of the UK market.” United Kingdom, united future: Conclusions of the Scotland analysis programme, HM government, June 2014, page 35 ↩

  36. “[S]ome supermarket firms have identified that there is a higher cost of doing business in Scotland. They have stated further that if Scotland were independent, these higher costs may be passed on to supermarket bills in Scotland rather than being shared across all UK consumers as they are now. Higher costs could arise due to differences in geography, tax, or regulation.” United Kingdom, united future: Conclusions of the Scotland analysis programme, HM government, June 2014, page 37 ↩

  37. “On joining the EU Scotland would not be able to control all of its tax rates: for example, general rules on VAT would apply. The UK has negotiated a number of exceptions from the general VAT rules. If Scotland was not able to negotiate similar arrangements, a minimum of 5 per cent VAT would need to be charged on goods and services that are currently zero rated, which could increase the prices paid by consumers.” United Kingdom, united future: Conclusions of the Scotland analysis programme, HM government, June 2014, page 38 ↩

  38. “The price that consumers pay to post letters and parcels would be affected. UK consumers currently pay more to send post to Dublin than they do to Belfast.” United Kingdom, united future: Conclusions of the Scotland analysis programme, HM government, June 2014, page 39 ↩

  39. “Without unrestricted access to the integrated GB market, the costs of supporting Scottish energy network investment, small-scale renewables and programmes to support remote consumers would fall on Scottish bill payers alone – this would add at least £38 to annual household energy bills… in 2020. In addition, if the full costs of supporting large scale Scottish renewables fell to Scottish bill payers the total potential increase would rise considerably – up to £189 for households…. in 2020. This could rise even further depending on an independent Scottish state’s share of historic energy liabilities and how these are paid for.” Scotland analysis: Energy, HM government, April 2014, pages 5 – 6 ↩

  40. “The powers of the Scottish Parliament and government were established by the Scotland Act 1998 and were further increased in the Scotland Act 2012.” The Scotland Act 1998 and The Scotland Act 2012 ↩

  41. “The Scottish government is responsible for matters including health, education, justice and policing and local government.” Maintaining and strengthening the Scottish devolution settlement, HM government. ↩

  42. From April 2015, the Scottish Parliament will have the power to set; Stamp Duty Land Tax and Land Fill Tax as well as additional borrowing powers. From April 2016 the Scottish Parliament will have the power to set Scottish rates of income tax. Scotland in the UK, HM government, 7 May 2014, page 4. ↩

  43. “The Scotland Act 2012 transferred more powers to raise taxes from the UK government to the Scottish Parliament along with other measures to strengthen and develop the devolved institutions.” Maintaining and strengthening the Scottish devolution settlement, HM government. ↩

  44. All 3 of the largest political parties in the UK have already committed to enhancing Scotland’s devolution settlement: “All the mainstream pro-UK parties believe in further devolution… We want to make the Scottish Parliament more responsible for the money it spends – these are real powers with real consequences… Scotland can have the best of both worlds; a strong and responsible Scottish Parliament underpinned by the security of the whole United Kingdom.” Rt Hon David Cameron MP, Prime Minister, June 2014. “A Scottish Parliament that doesn’t just spend the cheque handed over from Westminster, but which has the power to raise the majority of its budget too – creating greater accountability and the power to affect radical change.”Rt Hon Nick Clegg MP, Deputy Prime Minister, March 2014. “…a new Scotland Act… [including] far reaching powers over income tax, housing benefit and the work programme. Not powers for the sake of it, but powers for a purpose.”Rt Hon Ed Miliband MP, Leader of the Opposition, May 2014” United Kingdom, united future: Conclusions of the Scotland analysis programme, HM government, June 2014, pages 12-13 (pdf) ↩

  45. “GDP figures reveal that the economy has grown at its fastest rate in 6 years…. Today’s figures show that Britain is coming back – but we can’t take that for granted. We have to carry on working through our long term economic plan. For the first time in a decade all 3 main sectors of the economy – manufacturing, services and construction – have grown by at least 3% in the last year.” George Osborne, quoted in HMT statement, 29 April 2014. Source: Gross Domestic Products, Preliminary Estimate Q1 2014, Office for National Statistics, 29 April 2014. ↩

  46. “Scotland’s economy has particular strengths in a number of sectors such as energy (including North Sea oil and gas) and finance. However, these sectors are comparatively vulnerable to economic shocks, which has a significant impact on Scottish economic and fiscal performance year-to-year. The integration of the Scottish economy into the larger and more diverse UK economy shields the Scottish economy from the damaging effects of economic volatility and limits the impact of global crises. Scotland’s growth has avoided some of the volatility observed elsewhere in comparable European countries.” Scotland analysis: Macroeconomic and fiscal performance, HM government, September 2013 p. 6 (pdf) ↩

  47. “In 2008, the UK government spent £45 billion recapitalising the RBS in order to protect the deposits and savings of households and small business. In addition, the bank received £275 billion of guarantees through the UK government’s Asset Protection Scheme. This combined support from the UK government to RBS is equivalent to some 211% of Scottish GDP in 2008.” Scotland analysis: Financial services and banking, HM government, May 2013, page 7 (pdf) ↩

  48. The powers of the Scottish Parliament and Government were established by the Scotland Act 1998 and were further increased in the Scotland Act 2012. The Scotland Act 1998 and The Scotland Act 2012 ↩

  49. “The Scottish government is responsible for matters including health, education, justice and policing and local government.” Maintaining and strengthening the Scottish devolution settlement, HM government. ↩

  50. From April 2015, the Scottish Parliament will have the power to set; Stamp Duty Land Tax and Land Fill Tax as well as additional borrowing powers. From April 2016 the Scottish Parliament will have the power to set Scottish rates of income tax. Scotland in the UK, HM government, 7 May 2014, page 4. ↩

  51. “The Scotland Act 2012 transferred more powers to raise taxes from the UK government to the Scottish Parliament along with other measures to strengthen and develop the devolved institutions.” Maintaining and Strengthening the Scottish Devolution Settlement, HM government and The Scotland Act 2012 ↩

  52. All 3 of the largest political parties in the UK have already committed to enhancing Scotland’s devolution settlement: “All the mainstream pro-UK parties believe in further devolution… We want to make the Scottish Parliament more responsible for the money it spends – these are real powers with real consequences… Scotland can have the best of both worlds; a strong and responsible Scottish Parliament underpinned by the security of the whole United Kingdom.” Rt Hon David Cameron MP, Prime Minister, June 2014. “A Scottish Parliament that doesn’t just spend the cheque handed over from Westminster, but which has the power to raise the majority of its budget too – creating greater accountability and the power to affect radical change.”Rt Hon Nick Clegg MP, Deputy Prime Minister, March 2014. “…a new Scotland Act… [including] far reaching powers over income tax, housing benefit and the work programme. Not powers for the sake of it, but powers for a purpose.”Rt Hon Ed Miliband MP, Leader of the Opposition, May 2014” United Kingdom, united future: Conclusions of the Scotland analysis programme, HM government, June 2014, pages 12-13 (pdf) ↩

  53. “Managing the fiscal effects of the benefits of natural resources and an ageing population are exactly the sorts of challenges that fiscal unions, such as the UK’s, are able to smooth over long periods of time. For example: differences in regional demographics; the benefits of windfalls in coal and oil revenues; and lower debt interest costs from low borrowing rates, have and continue to be shared across the UK. At various times in the history of the Union, different nations will have ‘paid in’ or ‘drawn out’. But over time, everyone is stronger for having the insurance and economies of scale that the UK’s fiscal union, large economy and credible institutions provide.” Scotland analysis: Fiscal policy and sustainability, HM government, May 2014, page 7 ↩

  54. “GDP figures reveal that the economy has grown at its fastest rate in 6 years…. Today’s figures show that Britain is coming back – but we can’t take that for granted. We have to carry on working through our long term economic plan. For the first time in a decade all 3 main sectors of the economy – manufacturing, services and construction – have grown by at least 3% in the last year.” George Osborne, quoted in HMT statement, 29 April 2014. Source: Gross Domestic Products, Preliminary Estimate Q1 2014, Office for National Statistics, 29 April 2014. ↩

  55. “As part of the UK, Scotland benefits from the full range of UK defence capabilities and activities. These defend UK airspace, patrol the surrounding seas and help to protect everyone in the UK against both natural and man-made threats.” Scotland analysis: Defence, HM government, October 2013, page 6 (pdf) ↩

  56. “The UK sits at the nexus of a huge variety of international groupings, of many of which it is a founder member, leading player or major contributor.” Scotland analysis: EU and international issues, HM government, January 2014, paragraph 2.43, page 49 (pdf) ↩

  57. “The UK is one of 5 permanent members of the UN Security Council, and the only state in the world which is a member of the EU, NATO, G7, G8, G20 and the Commonwealth.” Europe and international – summary leaflet, HM government, 13 March 2014 ↩

  58. “In the event of a vote in favour of leaving the UK, in the eyes of the world and in law, Scotland would become an entirely new state.” Scotland analysis: Devolution and the implications of Scottish independence, HM government, February 2013, paragraph xiv, page 7 (PDF) ↩

  59. “This paper is based on independent expert opinion from 2 leading authorities on the issue of state formation and how this is seen in international law. They are James Crawford SC, Whewell Professor of International Law at the University of Cambridge, and Alan Boyle, Professor of Public International Law at the University of Edinburgh.” Scotland analysis: Devolution and the implications of Scottish independence, p.6 paragraph viii (pdf). For full expert opinion see: Opinion: Referendum on the Independence of Scotland – International Law Aspects Professor James Crawford SC, Professor Alan Boyle, February 2013 (pdf) ↩

  60. “The United Kingdom and Scottish governments… look forward to a referendum that is legal and fair producing a decisive and respected outcome.” Agreement between the United Kingdom government and the Scottish government on a referendum on independence for Scotland, HM government and The Scottish government, Edinburgh, 15 October 2012, paragraph 30 (pdf) ↩

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