Scotland talks independence – but can it afford it?

The recent revival of the debate on Scottish independence has sharpened focus on a pressing question: Can Scotland stand alone economically?

First Minister Alex Salmond, head of the Scottish government, today outlined his vision for the referendum, which he said will be held in fall 2014. 

"Our nation is blessed with national resources, bright people, and a strong society. We have an independent education system, legal system, and [National Health System]. They are respected worldwide. I believe that if we connect the wealth of our land to the well being of our people, we can create a better country," he said. 

Scotland has some control over its finances, but has no central tax-raising powers of its own, instead receiving a share of the British public purse. Critics say that share is disproportionately high, while Scottish nationalists say it is too low and doesn't accurately reflect the Scottish contribution to the economy.

Central to the economic argument is North Sea oil and gas, a key component of the Scottish and British economies that is expected to generate £13 billion ($20.2 billion) in tax revenues during the current financial year.

With the pro-independence Scottish Nationalist Party now in control of the Scottish parliament in Edinburgh for the first time, the idea of independence is gaining traction. First Minister Salmond vowed when his party won in 2011 to hold a referendum on independence before the end of his term. But British Prime Minister David Cameron and his ruling coalition in London said earlier this month that Scotland's devolved parliament does not have the constitutional powers to call a referendum, or to dictate its terms, sparking a heated debate. 

That argument died down, left unresolved. But now that the issue of independence has been seriously broached, Scots are questioning more than who should be in charge.

North Sea resources 

The North Sea oil and natural gas resources are critical to the British economy, and if Scotland does break free, negotiations over how to share them are likely to be fierce. The Scottish National Party insists that Scotland's 90 percent geographical share of the deposits means that the country has consistently contributed more to the British economy than it receives back.

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