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Opinion

Beyond the Union: a new economic model for Scotland and Wales

11 Jun 2025 9 minute read
Photo esfera

William Thomson, Founder, Scotonomics, Mark Hooper, Plaid Cymru Cllr in Barry, Kairin van Sweeden, SNP Cllr in Tillydrone/ Seaton/ Old Aberdeen.

If our nations adopt a new economic approach that prioritises building monetary sovereignty gradually, and place wellbeing above mere material consumption, we can expect greater prosperity than remaining part of a State whose institutions undermine the values driving both the Welsh and Scottish independence movements.

The Scottish and Welsh independence movements have lots of things in common. Principally, the obvious fact that we both seek to gain independence from the same Union.

Both nations have a history of colonial conquest and resource extraction. Progressive ideals underpin both movements. A recent poll reported a figure as high as 40% in support of Welsh independence (from 17% in 2014).

Polls in Scotland still regularly suggest a figure around 50%. Slowly but steadily, the size of our movements is coalescing.

In both Scotland and Wales, Independence is a social movement, and by becoming independent, both movements aim to create a more prosperous, fair, and just society.

Shared vision

With the shared vision for a new society, there are many areas which individual supporters would highlight. Some would see a society that has more respect for our environment. A greater role for the native language. Others would see a nation that better understands its place in the world. Within the myriad of differences that motivate independence supporters, we suggest that three areas stand out: independence is a cultural, democratic and economic project.

Independent nations tend to value and invest greater resources in their unique culture and cultural heritage. It would be hard to imagine that a cultural outpouring would not follow after independence for Scotland and Wales.

The very act of independence boosts democracy. With the end of devolved settlements, power would be returned closer to the people.

In sum, improving the standing of culture and democratic accountability after independence is more of an evidence-backed statement than an argument. But the case for the economy is quite different.

Can we actually define our economy?

Firstly, what do we mean by a better economy? How do we measure prosperity? Does fairness and justice define or simply influence the way we structure production, consumption and the disposal of resources? And the most important question for both those inside and outside of the independence movement: will we be better off as an independent nation or as part of the UK?

One way to approach this question is to examine our current standard of living as part of the UK. In 2022, Welsh GDP per person was around 25% lower than the UK average, while Scotland’s GDP per capita was closer to the UK average. This shows the starting positions of our economies as we consider independence. However, it says little about our daily lives or wellbeing.

William Thomson

Reflecting on the 2014 Scottish independence referendum, the case for a wealthier society through independence rested largely on hope. At the time, the UK economy was in a phase of fiscal austerity—later linked to as many as 300,000 premature deaths. Yet, despite the obvious pain, the broader UK economy still appeared relatively stable.

How wrong we were. The economic story of the UK in the last forty years is one of decline. There are now close to five times as many working families below the poverty line as in the 1970s. Young people need to raise nine times their average earnings to afford a home when, in the mid-1990s, it was only four times.

Class divide

There is also a growing class divide. During a ‘cost of living crisis, energy companies and banks—Barclays Bank has made £2.7 billion profit so far this year—have seen historic profits. Homeowners pay only 18% of their income on their homes, while private renters pay 32%. We see boarded-up shops in even the wealthiest parts of our nations. From vast tracts of rural land to small urban community spaces, our land is used to house products and services that are only consumed by the wealthiest in society.

Over the last decade, the UK economy and society have begun to buckle under the strain of increasing inequality. Both are structurally unsound due to the resources drained into London and the South East, primarily to support an extractive financial services sector. We lack economic resilience, relying as we do on a limited number of service sectors.

We have an economy that relies on poverty wages (at best) and a precarious workforce. Bullshit jobs, as economic anthropologist David Greaber terms them, deplete our natural resources while adding little to our economic or personal wellbeing. Over-financialisation has created a society that knows the cost of everything but the value of nothing. To quote David Greaber, we live in a society where “the more one’s work is seen as socially useful….the less one is likely be to be paid for it.” 

Kairin van Sweeden

 As with every society, the economic direction of the nation has been constructed by an establishment through its large and powerful institutions. In the United Kingdom, the City of London, much of the foreign-owned media, the Bank of England, ‘elite’ public schools and universities, the Treasury, UK-based multinationals and the UK Government have created these dire economic conditions. The UK is an anachronism, institutionally designed to suck wealth from Scotland, Wales, Northern Ireland and much of the periphery of England. It is designed to reward the already wealthy by capturing our common wealth. It survives by using austerity—fiscal, industrial and monetary—to keep the majority in check. It undermines our social cohesion by othering minorities.

There is now ample evidence that independence for both nations would result in a stronger economy than remaining in the UK.

The economics of independence

Central to the economic success of both nations—underpinned by each country’s sovereign currency—will be an increase in public expenditure.

In his book Shattered Nation, Economic Geographer, Danny Dorling, highlights the state we are in, “Overall, UK public spending as a percentage of GDP fell below that of Spain in the 1980s, and below that of Greece in the 1990s. By 2005, it was already lower than almost every other Western European nation”. Scotland and Wales must redress this decline. Both nations are in desperate need of significant public expenditure, especially in transportation, telecommunications, housing stock and infrastructure to support electrification. Both governments will embark on their independent journey, looking out over a stock of public resources that need reshaping and reengineering. The call on the public purse will be significant without question, stretching beyond any similar deficit rules currently curtailing expenditure in the UK.

Where does the money come from?

For many who oppose independence, their argument stops right there—they claim that Scotland and Wales would lack the tax base to generate enough revenue to fund such large-scale spending. They would add that no financial institutions will lend them the money they require. However, an understanding of money, debt, the role of taxes, and borrowing that delves beneath the surface of most commentators’ economic understanding paints a very different picture for small and medium-sized wealthy European nations, such as Scotland and Wales.

Insights from Modern Monetary Theory (MMT) can empower two progressive governments in Cardiff and Edinburgh. These new monetary sovereign governments, issuing their own currency on the day of independence, can utilise the power of the public purse to create an infrastructure for prosperity by engaging in deficit spending to offset decades of low public expenditure. Spending can be mission-led, focusing on eliminating poverty, achieving low emissions and material consumption, creating a care economy, or building local, regional and national resilience. Meaningful targets that challenge and define our society, instead of the artificial fiscal targets that stymie much-needed spending by the UK government.

After independence, both governments will regulate their own financial services sectors, which can be designed for public purpose rather than profit.  Bonds do not fund government spending in a monetary sovereign state, and both nations will likely release their own debt to ensure that the private sector has safe investments in both Welsh and Scottish currencies.

Mark Hooper. Photo Joe Baker

Their central banks can decide what rate of interest to reward their few commercial banks that hold central bank reserves or government bonds. Taxes can fulfil their true purpose by reducing inequality, controlling production and consumption habits, creating space for public expenditure, and underpinning the value of the currency. For a monetary sovereign government, taxes do not fund government spending.

Paradigm-shifting insights from MMT open up a progressive route for our two new States. The current ‘austerity paradigm’ that controls the UK will never support the progressive agenda that drives both independence movements. If our movements are to achieve a progressive destination, they must embrace a new economic framework.

Armed with real-world knowledge, the answer to that all-important question: will we be better off than we are as part of the UK? It is simple to answer. Yes, we will. However, our economic journey is by no means a simple or painless one.

Challenging

The decades in which we grow up as independent nations will be among the most challenging for every single nation. The GDP of many nations will likely decline over those decades as the impact of centuries of economic and ecological mismanagement takes hold. It will take time to build nations that are self-sufficient and can withstand wide price swings in international commodity markets. Years to build our own energy, food and technological sovereignty.

Both new nations will be bound to a moribund larger nation to Scotland’s south and Wales’ east, a nation that will likely find a progressive path harder to follow. The amount of debt held by the Scottish and Welsh private sectors in Sterling may slow our progress towards prosperity. With a desire to avoid fiscal austerity, our currencies may have to be devalued. Tough decisions lie ahead. However, with independence, it is sovereign Welsh and Scottish citizens who make those decisions.

Supported by Yes Cymru, Scotonomics is running two events that will explain how monetary sovereignty must be at the centre of our economic visions for independence: Glasgow on 11 July and Cardiff on 18 July


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Peter J
Peter J
1 day ago

This is a very interesting article. It’s worth adding for balance, MMT has never been trialled in any country before. Such a transition to this kind of system would be complex and full of political and economic risks. It would be an economic and social experiment. If one was to think of reasonably similar examples in recent years – developed countries during Covid (but led to high inflation, and possibly the rise of populism), Greece in GFC (which led to mass austerity, though possibly because didn’t have monetary sovereignty), and Zimbabwe (which led to hyperinflation and about 1/3 of it… Read more »

Last edited 23 hours ago by Peter J
Rhian Hewitt Davies
Rhian Hewitt Davies
23 hours ago

We’re living in tough times. But where there’s a will there’s a way, as they say. From the Knowit Rhian

CJB
CJB
23 hours ago

This is a dangerous monologue filled with many economic falsehoods. Wales is on its knees with annual GDP per head less than all counties in England bar one. The flow of money is from English tax payers and English GDP back to Wales as we are so ill equipped ourselves. Just look at the annual tax revenues that Wales produces. The size of the public sector in Wales is large and increasing and by definition it does not generate wealth. Productivity has collapsed. Our Welsh education system is failing as is our Welsh NHS. These are run autonomously by us… Read more »

JKLWMS Thomas
JKLWMS Thomas
21 hours ago
Reply to  CJB

You speak as if the UK – or England- are in an enviable finacial position. Its not- the National Debt is enormous and equal to what it earned; surpassed by only a handful of other countries in the World. The US centric/Thatcher inherited approach has proven reckless and we inherit huge debt, diminished assets, creaking infrastructure, huge disparity in wealth between individuals and regions, and populism that aims to govern by soundbites. The status quo has made us poor, and you will never be able to achieve the aspirations you hold while being tied to a governing structure that is… Read more »

Undecided
Undecided
16 hours ago
Reply to  CJB

I agree with most of what you say. The article is muddled – lacking a clear description of the nuts and bolts of this new model, laced with references to dodgy concepts such as the well being economy and resorts to the tired kicking for English public schools, Barclays Bank and others. The advocates are going to have to do a lot lot better than this.

JKLWMS Thomas
JKLWMS Thomas
21 hours ago

Key question is what happens to the UK National Debt now at nose bleed levels that will limit any Exchequer’s growth plans. Its been run up by Westminster but does an independent Wales retain a part of these obligations or does it start with a clean slate (no debt)? If the latter, Wales would be in an enviable position able to sharply lower income and corporate tax levels to stimulate its economy. But somehow I suspect whether such a clean break is achievable?

And
And
17 hours ago
Reply to  JKLWMS Thomas

Wales wouldn’t automatically take on any UK debt. Just as Ireland didn’t.

If the UK wanted Wales to take on some of that debt it would have to give Wales something in return… and its hard to see what that could be.

Thomas
Thomas
23 minutes ago
Reply to  And

The UK national debt has been run up by ever-increasing spending on public services across the UK, borrowing too much to fund this spending, and then spending record amounts servicing the interest on the debt (debt interest payments now exceed £100 billion p.a.). Given this spending has been spread across the UK, it is hard to construct a valid argument that each part of the UK should not bear some responsibility for it. If you honestly believe one nation can leave and not take its share of the debt, you should consider a scenario in which England declares independence from… Read more »

Blodwen
Blodwen
11 hours ago
Reply to  JKLWMS Thomas

In order for England to inherit the seat on the security council of the UN (which any English Prime Minister would 100% want to do), England would have to take on the UK debt when Scotland and Wales become independent

Drew Anderson
Drew Anderson
9 hours ago
Reply to  Blodwen

Good answer, but to flesh it out a bit for others’ benefit: The scenario you describe is England becoming a “continuing” state; Russia is the continuing state of the Soviet Union for example. All of the other republics became “successor” states. I agree that England seeking continuing status would be highly probable, for the UNSC seat alone. The alternative is a Czechoslovakia scenario, where neither party claimed continuing status; both parties became successor states and started afresh. Where a party claims continuing status, it is basically saying we want to keep all of the assets, privileges and rights of the… Read more »

Peter J
Peter J
4 hours ago
Reply to  Blodwen

The UN security council itself decides who would retain the permanent seat. See USSR and Russia. They wouldn’t care too much about a quarrel over national debt

Peter J
Peter J
4 hours ago
Reply to  JKLWMS Thomas

Well Brexit showed the stronger of the two sides ultimately gets what it wants. An independent country would not be obliged to take a % of debt (probably) but if you wanted trade deals, discussions on pensions etc, the rest of the UK can play hardball and there’s not much an independent Wales couldl do without harming itself further.

Chris Wood PhD, JD
Chris Wood PhD, JD
12 hours ago

“A bit of strange”. For example, if I recall SNP were arguing for monetary ‘sovereignty’ based on the British £ for some time – so no real monetary sovereignty at all. Also, socialist Senedd would likely increase taxes for pay for lavish spending plans in the mistaken belief prosperity is driven primarily by “public investment”.  Specifically, the authors fairy tale ridiculous proposition that: “These new monetary sovereign governments, issuing their own currency on the day of independence, can utilise the power of the public purse to create an infrastructure for prosperity by engaging in deficit spending to offset decades of low public expenditure.” Got… Read more »

Last edited 12 hours ago by Chris Wood PhD, JD
Thomas
Thomas
4 minutes ago

If I can summarise the article: The authors apparently believe that from day one of independence, they can spend unlimited sums on public services, funded by ever-increasing debt, with taxes used purely for social engineering. Despite being mostly funded by debt, the new government itself would set the interest rate it would pay on this debt and therefore everything would be OK. Wow, if was as easy as that, do they not think somebody would have tried this already? I would posit that plenty of countries have tried spending massively beyond their tax-base and in each and every case it… Read more »

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