The economics of devolution: Athens-upon-Clyde

UK Only Article: 
UK article only

Issue: 

Empire of the geeks

Fly Title: 

The economics of devolution

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Fiscal independence coupled with monetary union is risky

THOUGH the United Kingdom holds together, just, its four member countries form an ever-looser union. The Scotland Bill, currently before Parliament, is likely to adopt many of the proposals of the Smith Commission, set up following the independence referendum last September, and stipulate that the Scottish Parliament control 60% of public spending in Scotland (up from 50% now) and 40% of taxation (up from 15%). Northern Ireland and Wales may be granted similar privileges. Meanwhile David Cameron, Britain’s prime minister, argues that English MPs should have exclusive say over fiscal matters that affect only England.
Much about fiscal devolution is appealing. There is some evidence that it lifts productivity—worryingly stagnant in Britain—since regional governments make better investments in local infrastructure. It is consistent with the idea that representation and taxation should be closely linked: if …<div class="og_rss_groups"></div>
Source: The Economy