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Scottish independence: could wind power Scotland back into the EU?

Those who talk down an independent Scotland’s prospects are not factoring in one of its biggest natural resources.

Now that First Minister Nicola Sturgeon has survived the investigation over the handling of the case against Alex Salmond, Scotland’s attention is turning to the country’s May election. With the SNP seeking a clear mandate for a second referendum on the back of the vote, independence is back to the top of the agenda. It remains to be seen how Salmond’s new pro-independence Alba party will affect the outcome, but according to the latest independence polls, support for leaving the UK is still narrowly in front.

Yet there is much more economic and political uncertainty in Scotland than in 2014. Following Brexit, Scotland is having to choose which economic area it most wants to associate with – the UK or the EU.

Remaining in the UK means continuing Scotland’s existing economic relationship with England and Wales while facing a more complex relationship with the EU and more controversially Northern Ireland, which effectively remains in the single market.

A thistle
Finances are a thorny matter. Illiya Vjestica/Unsplash, CC BY-SA

What about voting for independence and joining the EU? One major problem is the EU fiscal rules, which require a general budget deficit of no more than 3% of GDP per member (this is temporarily suspended because of COVID).

In 2019-20, Scotland’s deficit amounted to 6.9% if North Sea oil revenues are included (or 7.5% without it). This was a considerable improvement on earlier years, but still well above the threshold – and that was before the pandemic.

Now UK borrowing is hitting record highs and the Institute for Fiscal Studies thinks Scotland’s effective deficit will have reached close to 30% in 2020-21. This will affect the long-term debt burden of both the UK and Scotland, and raises questions about how an independent Scotland’s share of the UK debt should be calculated.


Read more: Scottish independence referendum: why the economic issues are quite different to 2014


Any analysis of independence economics should therefore start by asking whether an independent Scotland could balance the books by increasing revenues and decreasing spending and how willing Scottish society would be to potentially make sacrifices. Trade looks likely to exacerbate this problem – in the short-term at least. Currently more than 60% of Scotland’s commerce is directed to other UK countries (including Northern Ireland, now practically an EU market for trading purposes) while only about 19% goes to the EU.

Ireland was actually similar before it joined the then European Economic Community (EEC) in 1973. Just before joining, almost 55% of her exports and 51% of imports were directed to the UK, while only 21% went to the EEC. These shares have since completely reversed, though it has taken time and was very complicated and costly for the country as such overhaul requires finding new markets and adjusting to the requirements of new customers, which is always costly for both workers and firms.

Scotland would have to go through a similar adjustment, and voters should be aware of this.

Scottish exports were at least competitive in the EU market pre-Brexit. In 2014, some economists suggested that dwindling North Sea oil revenues were a red herring and that Scotland could develop a competitive advantage in well-performing areas like food and drink, financial services, sustainable tourism and green energy.

The EU and green energy

One big question is how rejoining the EU would affect Scotland’s finances. The EU would not subsidise Scottish public sector spending, and would probably not make funds available through the bloc’s Cohesion Fund. Scots might not think their country is rich, but it earns more than 90% of the EU’s average gross national income – well above various needier members.

However, the European Regional Development Fund (ERDF) could be of assistance, potentially easing the transition for the nation’s public finances. The ERDF, the 2014-20 budget of which amounted to €199 billion (£170 billion), focuses on the areas which could well be priorities for an independent Scotland such as innovation and research, the digital agenda, support for small businesses and the low-carbon economy.

Green energy would be of particular mutual interest to Scotland and the EU, especially wind power, for which Scotland has the most favourable conditions in Europe. Scotland’s accession would be valuable to help the EU meet its goal of climate neutrality by 2050.

At least 25% of the EU’s long-term budget is to be dedicated to climate action, while the European Investment Bank, the EU’s lending arm, plans to invest €1 trillion in climate action and environmental sustainability between now and 2030.

Scotland’s wind power capacity is comparable with Italy and below only Germany, Spain and France. But more importantly, 97% of internal energy consumption in Scotland originates from renewables. The EU member with the highest green energy consumption is Sweden, with less than 60%. The EU total is only around 20%, so Scotland would immediately raise this share.

Any increase in Scotland’s wind energy production could also be diverted to supply the EU with green energy, further increasing its overall share. Yes there are limitations with the electrical interconnectors, but EU finance could be used to expand them.

As Glasgow gets ready to host the COP26 climate conference in November, Scotland’s competitive advantage in green energy ought to be an important part of the economic case for independence if and when the second referendum takes place.

The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

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Angry Shouting Aside, Here’s What Biden Is Running On

Angry Shouting Aside, Here’s What Biden Is Running On

Last night, Joe Biden gave an extremely dark, threatening, angry State of the Union…

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Angry Shouting Aside, Here's What Biden Is Running On

Last night, Joe Biden gave an extremely dark, threatening, angry State of the Union address - in which he insisted that the American economy is doing better than ever, blamed inflation on 'corporate greed,' and warned that Donald Trump poses an existential threat to the republic.

But in between the angry rhetoric, he also laid out his 2024 election platform - for which additional details will be released on March 11, when the White House sends its proposed budget to Congress.

To that end, Goldman Sachs' Alec Phillips and Tim Krupa have summarized the key points:

Taxes

While railing against billionaires (nothing new there), Biden repeated the claim that anyone making under $400,000 per year won't see an increase in their taxes.  He also proposed a 21% corporate minimum tax, up from 15% on book income outlined in the Inflation Reduction Act (IRA), as well as raising the corporate tax rate from 21% to 28% (which would promptly be passed along to consumers in the form of more inflation). Goldman notes that "Congress is unlikely to consider any of these proposals this year, they would only come into play in a second Biden term, if Democrats also won House and Senate majorities."

Biden also called on Congress to restore the pandemic-era child tax credit.

Immigration

Instead of simply passing a slew of border security Executive Orders like the Trump ones he shredded on day one, Biden repeated the lie that Congress 'needs to act' before he can (translation: send money to Ukraine or the US border will continue to be a sieve).

As immigration comes into even greater focus heading into the election, we continue to expect the Administration to tighten policy (e.g., immigration has surged 20pp the last 7 months to first place with 28% in Gallup’s “most important problem” survey). As such, we estimate the foreign-born contribution to monthly labor force growth will moderate from 110k/month in 2023 to around 70-90k/month in 2024. -GS

Ukraine

Biden, with House Speaker Mike Johnson doing his best impression of a bobble-head, urged Congress to pass additional assistance for Ukraine based entirely on the premise that Russia 'won't stop' there (and would what, trigger article 5 and WW3 no matter what?), despite the fact that Putin explicitly told Tucker Carlson he has no further ambitions, and in fact seeks a settlement.

As Goldman estimates, "While there is still a clear chance that such a deal could come together, for now there is no clear path forward for Ukraine aid in Congress."

China

Biden, forgetting about all the aggressive tariffs, suggested that Trump had been soft on China, and that he will stand up "against China's unfair economic practices" and "for peace and stability across the Taiwan Strait."

Healthcare

Lastly, Biden proposed to expand drug price negotiations to 50 additional drugs each year (an increase from 20 outlined in the IRA), which Goldman said would likely require bipartisan support "even if Democrats controlled Congress and the White House," as such policies would likely be ineligible for the budget "reconciliation" process which has been used in previous years to pass the IRA and other major fiscal party when Congressional margins are just too thin.

So there you have it. With no actual accomplishments to speak of, Biden can only attack Trump, lie, and make empty promises.

Tyler Durden Fri, 03/08/2024 - 18:00

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United Airlines adds new flights to faraway destinations

The airline said that it has been working hard to "find hidden gem destinations."

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Since countries started opening up after the pandemic in 2021 and 2022, airlines have been seeing demand soar not just for major global cities and popular routes but also for farther-away destinations.

Numerous reports, including a recent TripAdvisor survey of trending destinations, showed that there has been a rise in U.S. traveler interest in Asian countries such as Japan, South Korea and Vietnam as well as growing tourism traction in off-the-beaten-path European countries such as Slovenia, Estonia and Montenegro.

Related: 'No more flying for you': Travel agency sounds alarm over risk of 'carbon passports'

As a result, airlines have been looking at their networks to include more faraway destinations as well as smaller cities that are growing increasingly popular with tourists and may not be served by their competitors.

The Philippines has been popular among tourists in recent years.

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United brings back more routes, says it is committed to 'finding hidden gems'

This week, United Airlines  (UAL)  announced that it will be launching a new route from Newark Liberty International Airport (EWR) to Morocco's Marrakesh. While it is only the country's fourth-largest city, Marrakesh is a particularly popular place for tourists to seek out the sights and experiences that many associate with the country — colorful souks, gardens with ornate architecture and mosques from the Moorish period.

More Travel:

"We have consistently been ahead of the curve in finding hidden gem destinations for our customers to explore and remain committed to providing the most unique slate of travel options for their adventures abroad," United's SVP of Global Network Planning Patrick Quayle, said in a press statement.

The new route will launch on Oct. 24 and take place three times a week on a Boeing 767-300ER  (BA)  plane that is equipped with 46 Polaris business class and 22 Premium Plus seats. The plane choice was a way to reach a luxury customer customer looking to start their holiday in Marrakesh in the plane.

Along with the new Morocco route, United is also launching a flight between Houston (IAH) and Colombia's Medellín on Oct. 27 as well as a route between Tokyo and Cebu in the Philippines on July 31 — the latter is known as a "fifth freedom" flight in which the airline flies to the larger hub from the mainland U.S. and then goes on to smaller Asian city popular with tourists after some travelers get off (and others get on) in Tokyo.

United's network expansion includes new 'fifth freedom' flight

In the fall of 2023, United became the first U.S. airline to fly to the Philippines with a new Manila-San Francisco flight. It has expanded its service to Asia from different U.S. cities earlier last year. Cebu has been on its radar amid growing tourist interest in the region known for marine parks, rainforests and Spanish-style architecture.

With the summer coming up, United also announced that it plans to run its current flights to Hong Kong, Seoul, and Portugal's Porto more frequently at different points of the week and reach four weekly flights between Los Angeles and Shanghai by August 29.

"This is your normal, exciting network planning team back in action," Quayle told travel website The Points Guy of the airline's plans for the new routes.

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Walmart launches clever answer to Target’s new membership program

The retail superstore is adding a new feature to its Walmart+ plan — and customers will be happy.

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It's just been a few days since Target  (TGT)  launched its new Target Circle 360 paid membership plan. 

The plan offers free and fast shipping on many products to customers, initially for $49 a year and then $99 after the initial promotional signup period. It promises to be a success, since many Target customers are loyal to the brand and will go out of their way to shop at one instead of at its two larger peers, Walmart and Amazon.

Related: Walmart makes a major price cut that will delight customers

And stop us if this sounds familiar: Target will rely on its more than 2,000 stores to act as fulfillment hubs. 

This model is a proven winner; Walmart also uses its more than 4,600 stores as fulfillment and shipping locations to get orders to customers as soon as possible.

Sometimes, this means shipping goods from the nearest warehouse. But if a desired product is in-store and closer to a customer, it reduces miles on the road and delivery time. It's a kind of logistical magic that makes any efficiency lover's (or retail nerd's) heart go pitter patter. 

Walmart rolls out answer to Target's new membership tier

Walmart has certainly had more time than Target to develop and work out the kinks in Walmart+. It first launched the paid membership in 2020 during the height of the pandemic, when many shoppers sheltered at home but still required many staples they might ordinarily pick up at a Walmart, like cleaning supplies, personal-care products, pantry goods and, of course, toilet paper. 

It also undercut Amazon  (AMZN)  Prime, which costs customers $139 a year for free and fast shipping (plus several other benefits including access to its streaming service, Amazon Prime Video). 

Walmart+ costs $98 a year, which also gets you free and speedy delivery, plus access to a Paramount+ streaming subscription, fuel savings, and more. 

An employee at a Merida, Mexico, Walmart. (Photo by Jeffrey Greenberg/Universal Images Group via Getty Images)

Jeff Greenberg/Getty Images

If that's not enough to tempt you, however, Walmart+ just added a new benefit to its membership program, ostensibly to compete directly with something Target now has: ultrafast delivery. 

Target Circle 360 particularly attracts customers with free same-day delivery for select orders over $35 and as little as one-hour delivery on select items. Target executes this through its Shipt subsidiary.

We've seen this lightning-fast delivery speed only in snippets from Amazon, the king of delivery efficiency. Who better to take on Target, though, than Walmart, which is using a similar store-as-fulfillment-center model? 

"Walmart is stepping up to save our customers even more time with our latest delivery offering: Express On-Demand Early Morning Delivery," Walmart said in a statement, just a day after Target Circle 360 launched. "Starting at 6 a.m., earlier than ever before, customers can enjoy the convenience of On-Demand delivery."

Walmart  (WMT)  clearly sees consumers' desire for near-instant delivery, which obviously saves time and trips to the store. Rather than waiting a day for your order to show up, it might be on your doorstep when you wake up. 

Consumers also tend to spend more money when they shop online, and they remain stickier as paying annual members. So, to a growing number of retail giants, almost instant gratification like this seems like something worth striving for.

Related: Veteran fund manager picks favorite stocks for 2024

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