Wednesday, October 15, 2008

Which countries are best placed for economic recovery?


Norway has oil: http://en.wikipedia.org/wiki/Image:Aker_Spitsbergen.JPG

The USA and UK are not well placed for economic recovery because of large debts and bad government.

The US budget deficit has swollen to a record $455 billion

In 1997, Gordon Brown, who is now the UK's prime minister, took the Bank of England out of regulating the level of debt in the economy.

Similar mistakes have been made in the USA.

So, which countries are in a strong position?

The small countries in the European Union are in a strong position.

(Between the lines: Small countries looking best placed for recovery.)

1. If we look at GDP per person, taking the EU average as 100, we find the following figures:

Norway 181

Ireland 146

Switzerland 137

These small countries are in a strong position.

The UK figure is 115.

2. If we look at productivity, taking the EU average as 100, we find:

Ireland 138

UK 109

Ireland has invested heavily in education and hi-tech manufacturing.

3. If we look at the % of GDP spent on research we find:

Sweden 3.7%

Finland 3.5%

But the UK figure is only 1.8%

4. If we look at the % of GDP spent on capital investment in fixed plant and IT equipment we find:

Ireland 22

UK 16

Scotland has oil http://en.wikipedia.north_seapros.jpg/

If Scotland was independent, how would it fare?

The Scotsman, 15 October 2008, (The Scotsman) asks some questions and gives us some answers:

Would an independent Scotland have been able to bail out the two Scottish banks RBS and HBOS?

1. Would an independent Scotland have the £37 billion required by the banks.

The Scotsman points out that the UK government does not have the money!

The UK government will have to borrow the £37 billion from the world money markets in the form of a gilt auction.

An independent Scotland could presumably have done the same.

2. Would RBS and HBOS have got into such trouble had Scotland been independent?

The Scottish National Party has argued that Scotland would have better financial regulation.

Politics professor John Curtice has suggested that an independent Scotland might have prevented the Bank of Scotland from being merged with the Halifax.

3. Would an independent Scotland have been able to cope with the banking crisis in general?

Scottish Nation Party leader Alex Salmond says that an independent Scotland would have acted as decisively as the Irish government, which moved to guarantee all deposits in its banks.

The London government dithered.

4. When we look at the small European countries like Ireland and Norway, is there an "arc of prosperity" or an "arc of insolvency"?

The "arc of prosperity" was supposed to include Norway, Iceland and Ireland.

Norway is expecting its economy to grow for the next couple of years.

Irish economic expert Marc Coleman has pointed out that Ireland is well ahead of the UK in economic terms.

5. Had an independent Scotland been in the eurozone, would it have made a difference?

Being in the eurozone has cushioned the Irish economy from the worst effects of the credit crunch. Iceland is not in the Eurozone.

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