The Economic Consequences of the Scottish Referendum - Prof Brigitte Granville - Professor in International Economics and Economic Policy, Queen Mary

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The political result of the Scottish referendum – the preservation of the Union combined with a commitment by the UK political class to devolve further powers to Scotland – has naturally led to most instant commentary being focused on the political and, more specifically, constitutional consequences.  By contrast, the economic results will have difficulty competing for the attention they deserve – especially what looks likely to be the most tangible economic result: higher taxes in Scotland. This change holds out the interesting prospect of increased competition within the UK as regards the balance between the tax burden and the quality of public services.

The likelihood of higher taxes in Scotland is clear from a straightforward analysis of the referendum campaign and result. The ‘Yes’ platform was overtly redistributionist. It depicted union with England as binding Scotland into fiscal restraints that reflected the preferences of the UK political class (especially as represented by the Conservative Party that is the dominant partner in the present UK coalition government) rather than the choices and needs of the Scottish people. The electorate clearly got that message. An analysis of voting patterns in the referendum shows that the ‘Yes’ vote was higher in areas where there were proportionally more voters with the greatest dependency on the welfare state – such as the unemployed and recipients of disability benefits.  Against this background, and on the safe assumption that the promised further instalment of devolution will focus on tax raising powers, it follows that future elections to the Scottish parliament are likely to be won on platforms of higher marginal taxation to finance increased public spending.

The Politics of Austerity and Public Policy Reform in the EU - A symposium edited by Dr Stella Ladi (Queen Mary University of London) and Dr Dimitris Tsarouhas (Bilkent University) in Political Studies Review

In the introductory article it is argued that the EU is at a critical juncture that will either trigger further political and economic unity or reinforce the voices that instead call for intergovernmental co-operation in place of formal union.  The spread of market pressure from Ireland, Greece and Portugal to Spain, Italy and Cyprus and also beyond has demonstrated that the sovereign debt crisis needs to be dealt with at the European and not just the national level.  Up to now the “politics of extreme austerity” has been the mainstream recipe promoted to and adopted by member states.  The measures are tougher in those countries where there has been external financial assistance from the EU and the IMF (i.e. Greece, Portugal and Ireland) but the rest of Europe is following suit (e.g. Italy and the UK).