An independent Scotland's economic prospects rest on the outcome of tough choices about currency, public finances and membership of the European Union.
On balance, research suggests that for as long as the rest of the UK remains Scotland’s most important trading partner, Scotland would be better off prioritising integration with the rest of the UK. This means not re-joining the EU. That said, there are countries that have found new markets for exports in the EU following independence
Relying on high oil and gas revenues would not be a safe long-term option for securing a sustainable source of tax income for an independent nation. Tough choices on tax and spending, and efforts to improve economic growth beyond what North Sea reserves can offer, would be needed.
A new Scottish currency would not only give Scotland more power over fiscal and monetary policy, it could also allow its central bank to become involved in political issues.
Central bankers around the world may debate how far they should be involved with issues like inequality or climate change, forming policies that redistribute wealth, for example, or which manage financial risks brought by rising temperatures. But Scotland’s central bank would be limited in its ability to influence these issues without its own currency.
Independence would give the Scottish government additional powers – currently held by the UK government – potentially to strengthen the economy. Faster growth is easier to promise than deliver, and many of the key elements of a successful economic strategy would take time to have an impact.
There are a number of policy areas where a different path might be taken. For example, independence would give Scotland an opportunity to develop a different immigration policy to the UK’s. This might help to attract skilled migrants into Scotland and ease the pressure of the country’s ageing population and skill shortages.
Ultimately, Scotland’s success or otherwise as a small independent state would depend less on its size than on its leaders’ ability to exploit the benefits and overcome the disadvantages of small population size.