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Scotland talks independence – but can it afford it?

With a vote on Scotland's independence from the UK becoming more inevitable, Scots want to know how an independent Scotland would pay its bills.

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London is likely to argue that claims to the resources should be based on more than geography, such as substantial British investment in the industry. The prevailing opinion in England is that the North Sea resources are "extra-territorial," meaning they don't belong to Scotland and Scotland has actually been subsidized by the UK government. 

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Scottish nationalists envision an economy built on what they see as their rightful share of North Sea natural resources and an ambitious renewable energy program. The Scottish government has selected 2020 as its target year for deriving 100 percent of the country's energy from renewables – mostly through offshore wind and wave energy. Authorities are currently investigating whether Scotland met an interim target of 31 percent annual electricity consumption from renewables in 2011.

Salmond has said that between renewable and conventional energy generation, Scotland could export as much energy as it consumes. Many nationalists believe renewables could "re-industrialize" the country, which has suffered greatly from a decline in industry and manufacturing.

Critics say an independent Scotland's small population would not provide enough demand to support the renewable sector. Salmond argues that revenue from exporting renewable energy could cover some of the costs – while helping "keep the lights on in England."

Pounds and pence

If it approved independence, Scotland would have to decide whether to remain on the British pound, adopt the euro, or use a currency of its own. Salmond has said that Scotland would initially keep the pound, but eventually join the eurozone – a move that the UK has steadfastly resisted.

Scotland would have to renegotiate with Britain if it wants to retain the pound after independence. Alistair Darling, chancellor of the exchequer under the former Labour government and widely touted as the leader of efforts to keep Scotland in the union, warns that if Scotland left the union, it would be giving up its right to have a say in interest rates and other financial decisions pertaining to the pound.

"This is precisely the argument that is being engaged in the eurozone at the moment," Mr. Darling told London-based newspaper The Observer. 

Scotland's share of Britain's debt would also require tough negotiations. Two of the British banks heavily mired in the economic collapse of recent years were Scottish: the Royal Bank of Scotland and Bank of Scotland.

Can it manage its finances?


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