Warm words for Icelandic boom return to haunt Salmond

First Minister's dream of building north Atlantic 'arc of prosperity' left in tatters

The dream that an independent Scotland could be part of a north Atlantic "arc of prosperity" has been shattered by the latest twist in the global banking crisis, Labour has claimed.

Two pillars of the Scottish economy, RBS and HBOS, are now part-owned by UK taxpayers after being bailed to the tune of £31.5bn by the Treasury. The crisis has left analysts asking how an independent Scotland could have saved the two banks from collapse, on a GDP of £100bn a year.

Others, with a sense of history, were recalling that the Act of Union between England and Scotland in 1707 came about soon after Scotland had almost been bankrupted by wild speculative investment in a colony in Panama.

The Scottish First Minister and SNP leader Alex Salmond had held up Iceland as a small country enjoying the kind of boom economy that Scotland could aspire to copy. Before the country's banking system collapsed, Mr Salmond suggested that Scotland could join Iceland, Ireland and Scandinavia in an "arc of prosperity". That provoked a scathing retort from the Scottish Secretary Jim Murphy who claimed that it would have been an "arc of insolvency".

And the Scottish Labour MP Anne McGuire claimed: "The risks of independence have never been more starkly highlighted. While families, savers and businesses in Scotland will be relieved that the UK Government has stepped in support RBS and HBOS, they only need to look at Iceland to see what would happen to an independent Scotland. Alex Salmond's fantasy economics held out Iceland as a model for Scotland. We can now see how dangerous that idea was. Scottish families, banks and businesses are far more secure as part of the fourth-largest economy in the world than if Scotland were to separate itself from the UK."

John Park, Labour's economics spokesman in the Scottish Parliament, added: "I could never understand what connected these countries in the so-called arc of prosperity. The Irish model was very much a high level of European investment, and low corporation tax, and the Scandinavian model was something different again. These economies did not seem to have anything in common other than the fact that they suited Alex Salmond's argument.

"But the watchword now for the Scottish economy is interdependence, not independence. People in Scotland have been very impressed with Gordon Brown's action in bailing out these banks and by the fact that, as a large country, we have been together. People are starting to say, 'what would have happened to these banks if Scotland had been on its own?' I don't think the SNP have an answer to that."

The SNP insisted that the idea of an independent Scotland was alive and well. Pete Wishart, the SNP's constitutional affairs spokesman, said: "It is a sign of desperation that the first priority of the opposition parties, during what is a global financial crisis affecting nations large and small, is to talk down Scotland's abilities in this ridiculous and ill-informed way. In all circumstances, the more economic and financial powers Scotland has, the better placed we will be to succeed and build a strong and competitive economy."

Some economists have also pointed out that as a member of the EU and the eurozone – as an independent Scotland would almost certainly be – the country would have been in a much stronger position to weather the financial crisis than Iceland.

News
David Beckham
peopleFootballer joins No campaign
Sport
Angel Di Maria
Football
News
Piers Morgan tells Scots they might not have to suffer living on the same island as him if they vote ‘No’ to Scottish Independence
news
News
i100Exclusive interview with the British analyst who helped expose Bashar al-Assad's use of Sarin gas
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
BoxingVideo: The incident happened in the very same ring as Tyson-Holyfield II 17 years ago
Life and Style
Jourdan Dunn gave TopShop’s Unique show some added glamour at London Fashion Week
fashion week
News
Groundskeeper Willie has backed Scottish independence in a new video
people
Arts and Entertainment
The Doctor poses the question of whether we are every truly alone in 'Listen'
tvReview: Possibly Steven Moffat's most terrifying episode to date
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Training Coordinator / Resource Planner - City, London

£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Day In a Page

These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week
The fall of Rome? Cash-strapped Italy accused of selling its soul to the highest bidder

The fall of Rome?

Italy's fears that corporate-sponsored restoration projects will lead to the Disneyfication of its cultural heritage
Glasgow girl made good

Glasgow girl made good

Kelly Macdonald was a waitress when she made Trainspotting. Now she’s taking Manhattan
Sequins ahoy as Strictly Come Dancing takes to the floor once more

Sequins ahoy as Strictly takes to the floor once more

Judy Murray, Frankie Bridge and co paired with dance partners
Wearable trainers and other sporty looks

Wearable trainers and other sporty looks

Alexander Wang pumps it up at New York Fashion Week
The landscape of my imagination

The landscape of my imagination

Author Kate Mosse on the place that taught her to tell stories