Deutsche Bank: Scottish independence would bring austerity on a scale never seen before
13 September 2014 10:06 Fraser Nelson Many voters in Scotland moan about the media: half of the country wants separation, according to the polls, but almost all newspapers are against it. So where to turn, for dispassionate analysis? As James Forsyth says in his brilliant political column this week, there’s no one left to tell the truth.
That’s why private advice, issued by financial analysts to their clients, is interesting: these guys have no interest in spin, only accuracy. If they issue duff advice, their career is over. The analysis of Deutsche Bank (pdf) has been flying around Twitter, but not many are inclined to read long PDFs. So the below is an edited extract. It’s from David Folkerts-Landau, its chief economist. He explains quite clearly why independence would mean austerity on a scale that Scotland has never seen before. I’ve inserted the numbered subheadings: the rest is his.
I hope Deutsche Bank will excuse us, this one time, for reproducing what is essentially a leaked document without permission. These arguments do need as wide a circulation as possible, and there’s not much time left.
1. A wrong turn.
Everyone has the right to self determination and to exercise his or her democratic rights. But there are times when fundamental political decisions have negative consequences far beyond what voters and politicians could have imagined. We feel that we are the threshold of one such moment. A “Yes” vote for Scottish independence on Thursday would go down in history as a political and economic mistake as large as Winston Churchill’s decision in 1925 to return the pound to the Gold Standard or the failure of the Federal Reserve to provide sufficient liquidity to the US banking system, which we now know brought on the Great Depression in the US. These