At Your Party Scotland conference last weekend, a member stood up to speak against Scottish independence. In doing so, he quoted Nicola Sturgeon’s “admission” that independence would bring alongside it a decade of austerity. But why, in this case, are we choosing to accept the economic orthodoxies of the establishment? Independence is an opportunity to redesign Scotland’s economy with working people and strong public services at its heart.
Yes, an independent Scotland would begin its new life with a deficit; it is difficult to argue otherwise. Public spending in Scotland currently exceeds both the economic output it generates as well as its tax revenues, much of which is determined by decisions made at Westminster. But using this as an argument against independence rests on a series of harmful assumptions: that running a deficit is inherently harmful, that the deficit is caused solely by public spending rather than broader issues of capital ownership, and that the only way to reduce a deficit is through cuts.
The “ten-year-austerity” argument is extraordinarily short-sighted, ironically in a way that would cause immediate economic pain anyway. A large deficit is often seen as dangerous for one main reason: because the government is spending more than it earns, borrowing becomes more expensive, which might worry investors and limit what the government can do. The conclusion drawn from this is that the only path to renewed social and economic development is to cut spending first, thereby reducing interest rates. But this reasoning recycles the terrible argument that dominated the 2010 general election, that austerity is the only way to manage a deficit.
But as I said, a deficit is not inherently bad. In simple terms, it just means the government is spending more than it collects in a given year, something that is normal, and essential when investing significantly in things like housing, public services, or green energy. However, a degree of realism is important. Debt does need to be managed, because excessive reliance on borrowing can leave a government vulnerable to economic shocks or pressure from lenders. This can also make borrowing more expensive, further entrenching the issue.
Our problem arises when this reality is used to justify austerity, as it was by the Cameron-Osborne government. History shows that borrowing is often how governments escape economic crisis. After the 2008 financial crisis, countries that used public spending to stimulate their economies generally recovered faster than those that imposed deep cuts. In the UK, austerity turned a financial crash into a prolonged slump which, to this day, leaves no aspect of British life unaffected. Used strategically, debt allows governments to prevent downturn by supporting jobs, keeping services running, and investing in projects that stabilise the economy so it can recover rather than allowing it to shrink. For an independent Scotland, a strong plan for investment in new industries and public services would negate the uncertainty of transition whilst rejecting the negative politics of establishment economics.
Now that perhaps the most difficult argument has been addressed, we can turn to the claim that government spending is to blame for Scotland’s deficit. It’s an easy assumption to make following basic orthodox economic logic, but it is a deeply misleading simplification. A vast amount of the wealth generation in Scotland, either through public spending or the labour of working-class people, is siphoned away rather than reinvested or circulating in the everyday economy. Instead, it flows to private corporations (both domestic and foreign), financial institutions, landlords, landowners, and the richest individuals. Even modest public spending can leave a state in deficit when ownership of capital is so concentrated because profits accumulate in the hands of a few rather than society more broadly. As socialists, it is our responsibility to challenge this entrenched system of power and ownership and to reject what is an extractive economic model outright. An independent Scotland should be viewed as an opportunity to do so. The problem is therefore not that the government spends too much, but that ordinary people do not control the wealth they create, whether that be through public ownership, redistribution of resources into communities, or money in pockets. To reduce a deficit is not to impose austerity, but to fundamentally restructure the economy, and any argument that forgets this should be totally rejected by socialists.
The final assumption is that spending cuts are the only way to handle a deficit. This has already been addressed across the article in bit parts, but allow me to summarise. Even if Scotland does need to reduce a deficit, this can be achieved while improving people’s lives and redistributing wealth and power, rather than repeating the mistakes of 2010.
A socialist approach focuses on shifting who controls and benefits from wealth generation. Measures such as land tax, public ownership of key industries like energy (a national green investment company? Maybe that’s for another article), and investment in social housing, transport, and green jobs can all raise revenue while growing the economy. Crucially, this ensures that wealth remains in Scotland, in the hands of the Scottish people, and is used to spur continued growth. Strategic borrowing in a Scottish currency (again, another article…) could also fund these investments without imposing hardships.
In other words, Scottish independence can and must be an ambitious project of social and economic transformation, guided by modern socialist thought. Done right, it offers a chance to completely reject establishment economics. The argument that socialists and anti-austerity campaigners should reject independence is therefore not grounded in socialist principles, but the limitations of establishment orthodoxy.
