ON Tuesday the Scottish Government released a “scene setter” for independence, a 72-page document that launches a fresh vision for Scotland’s future apart from the United Kingdom.
Titled Wealthier, Happier, Fairer: Why Not Scotland?, it is the first in a series of papers making the case for independence. It argues there have been “significant” changes in the global environment since the 2014 referendum and so the context in which a new vote would take place would be entirely different, largely due to Brexit, the coronavirus pandemic and, more recently, the war in Ukraine.
Scotland has been dragged out of the EU against its will and Brexit, the paper argues, has set the UK on an economic path that imposes higher barriers to trade with Europe, is likely to lead to slower growth compared to European Union (EU) membership, and “increasing remoteness from our previously close economic partners and fellow Europeans in the EU”.
In short, the document goes on to look at 10 “comparator countries” which it argues “frequently” outperform the UK across a range of areas including wealth, social mobility, income equality, and poverty rates.
It attempts to drive home the point that improving Scotland’s economy will be harder if it remains tied to the UK, and prove Scotland will have the chance to prosper if only given the opportunity to stand on its own two feet.
Here we break down some of the key points of the paper and the areas in which these “comparator countries” are performing better than the UK:
The comparator countries
Before we get into why and how these "comparator countries" are performing better than the UK, it’s important to set out why these countries have been chosen.
The comparator countries are Norway, Sweden, Denmark, Finland, Iceland, Ireland, Belgium, Austria, the Netherlands, and Switzerland. They have been chosen because they are relatively small nations in close geographic proximity to Scotland and the paper states they provide “relevant examples” for an independent Scotland to learn from and possibly emulate.
The evidence presented in the paper shows these countries are outperforming the UK in multiple ways but crucially, it also shows the best-performing nations in this cohort are countries of Scotland’s size.
“Scotland is well-positioned to learn from the experience of other nations”
The paper argues Scotland has a range of assets that will allow it to maximise the opportunities of independence quickly through its natural heritage and capital – which will provide “exceptional” opportunities for tourism and underpin a “unique brand” – world-class universities, strong business sectors, and a “track record” in “innovation, invention and learning”.
The comparator countries are wealthier than the UK and have sustained this over time
In each of the comparator countries, the Gross Domestic Product per head is higher than the UK.
In 2020, GDP per capita was $87,735 in Ireland, $66,674 in Switzerland, $60,912 in Norway, $51,772 in Denmark, $51,572 in the Netherlands, $49,416 in Iceland, $49,098 in Sweden, $48,908 in Austria, $45,559 in Belgium and $44,451 in Finland.
In the UK GDP per capita fell below the OECD [The Organisation for Economic Co-operation] average to $40,941 in 2020.
Plus, with the exception of Finland in 2015, GDP per capita has been higher than the UK in all the comparator countries in every year since 2000.
The comparator countries have sustained high employment rates
The paper acknowledges the UK has maintained a high employment rate in recent decades but even so, Iceland and Switzerland have sustained an even higher employment rate and Norway, Denmark, the Netherlands, and Sweden have all fluctuated around the UK rate, leading the Scottish Government to argue the UK’s record is actually “unexceptional” when compared with these other countries.
Income inequality is lower in the comparator countries
All the comparator countries have significantly lower income inequality than the UK, with Iceland, Norway, Belgium, Denmark, Finland, Austria, and Sweden among the ten most equal nations.
On a scale where 0% is complete equality and 100% is complete inequality, the UK sits at 35% whereas most of the other nations sit below 30%, with Iceland at 25%.
Lower poverty rates
The document outlines how the comparator countries all have much less poverty than the UK. In 2020, out of 40 countries in the OECD statistics, Iceland had the lowest rate of poverty (5%) followed by Denmark in 3rd, Finland in 4th, Ireland in 5th, Belgium in 8th, Netherlands in 9th, Norway in 11th, Sweden in 13th, Austria in 16th and Switzerland in 17th.
The UK was way down at number 23 on the scale with a poverty rate of more than 12%.
It is highlighted how there are fewer children and pensioners living in poverty in the comparator countries too. In 2020, the poverty rates for children were lower in all of them than in the UK and the same for pensioners – with the exception of Switzerland.
Higher social mobility and life expectancy
Social mobility is the movement of people, families and households within or between social strata in a society. The comparator countries account for the top nine places in the World Economic Forum’s Social Mobility Index 2020 which ranks 82 countries, while Ireland is 18th and the UK is 21st.
In 2018, an analysis also found it would take on average five generations for those born in low-income families to approach the mean income in the UK.
Denmark was the only country assessed as achieving this change within two generations. Finland, Norway and Sweden took three, and Belgium and the Netherlands four.
The comparator countries can all also boast a higher life expectancy at birth than the UK’s 80.4 years. Norway for example is 83.3, Iceland is 83.1 and Ireland is 82.8.
Smaller gender pay gap and higher wages
In 2018 – the most recent year for which data for all countries are available – only Austria had a higher gender pay gap than the UK. Belgium had the narrowest gap, at 5.8%, followed by Ireland 11.3%, Sweden 12.1%, Norway 13.2%, Iceland 13.8%, Denmark 14.6%, Netherlands 14.7%, Finland 16.9%, Switzerland 18.6%, UK 19.8% and Austria 20.4%.
The comparator nations also have higher average wages. In 2020, average wages in US dollars were $67,488 in Iceland, followed by Switzerland at $64,824. The UK average wage is $47,147.
While Finland and Sweden have lower average wages than the UK, they have significantly lower income inequality.
Gross expenditure on research and development in comparator countries is higher
All the comparator countries except Ireland spend more on research and development than the UK. The full OECD dataset over time shows that the UK has spent below the OECD average in every year since 2000, while Denmark, Finland and Sweden have spent well above.
Sweden, Switzerland, Austria, Belgium, Denmark, Finland, Iceland and the Netherlands all spend more on business enterprise research and development than the UK.
Independence does not mean success
The paper also crucially highlights from the off that independence does not guarantee success. It says Scotland’s aspiration to be a wealthier and fairer country will depend entirely on decisions made AFTER independence.
But the paper states that the point of independence is to give Scotland the opportunity to craft its own future away from Westminster, which currently still commands power over several key policy areas such as defence and foreign affairs.
