The Estonia Role Model- just one slight problem...

Now that two-thirds of Salmond’s "Arc of Insolvency" are no longer providing such great economic examples, the desperate Nats have been looking further afield for examples of little countries doing alright in the face of the *ahem* spiv-induced financial crisis.And by a happy coincidence. Estonia’s President, Toomas Hendrik, popped up in Wales on Wednesday, sporting a natty dickie-bow and chirpily declaring:

"If there’s something that does work, it’s that if you’re a small nation, every mind counts. Every person who can think counts."

Enterprise and initiative, in other words, are the names of the game.
And I can almost hear a collective SNP "Thank God for Toomas" at the next set of comments:

He does not believe the collapse of Icelandic banks has doomed the concept of small, "clever" countries.

He said: "In terms of small countries, it’s basically how you do things. The financial sector in Estonia represents 4% of GDP.The financial sector in Iceland represented 25% of GDP."

Boasting of Estonia’s economic progress, he said: "We started out with a GDP of about $800 a year, and the last we measured was $21,600, which is basically the same as Portugal – that’s since independence to 2006."

Very good progress indeed (although, it must be said, one starting off from a much lower economic base than where N.Ireland, Scotland and Wales are presently residing); but could Estonia replace the Republic and Iceland as Alex’s new role model?

First of all, interestingly enough, the financial sector in Scotland also represents a relatively low proportion of the country’s GDP; until recently something in the region of 6 to 7 % and it should also be stressed that in more normal times that would have been considered too low, but there’s a another, more pertinent and relevant figure which is worth comparing and that’s the percentage contributed by the public sector to the respective countries’ GDP:

Estonia: 16%
N.Ireland: 71.3%
Scotland: 54.9%
Wales: 62.4%

As President Hendrik stated, the key to his country’s economic growth has been the "release of minds" of Estonia’s citizens from the stifling state-bureaucracies of the old USSR, a release which, although is producing great economic results today, is not one which happened without great economic and social pain. The Estonian politicians in the immediate post-independence era did not have to do a selling-job to their citizens: "Tighten your belts, not sure how we are going to provide you with education, health-care, pensions etc, but trust us because, in 15 years or so time, you never know, things might be a lot better", because quite simply the electorate did not have the choice- they had to make great sacrifices to guarantee the actual survival of their country. Today the financing of health and pension provision remains closer to the US than the UK model and is still (slightly) in terms of expenditure per capita below the EU average.

Now, if Estonia is to be held up as a post-independence example, then there is an obvious and stark question to be answered:

In the event of the break-up of the United Kingdom, is the public sector existing in N.Ireland, Scotland and Wales to be maintained at its present level and if so, how is it to be financed?

Alex’s bestest mates in Norway have a public-sector amounting to over 50% of the GDP and are still remaining (relatively) economically successful; they, however, pay for it by having one of the highest income-tax rates in the world. Other successful countries such as Estonia and Slovakia have reduced the social-security safety-net for their citizens to a level which I really do think would not be acceptable for the vast majority of the UK’s citizens, but by doing so, they have made their economy much more entrepreneur-friendly than the UK's (ie low corporate and income tax rates).
That folks would be basically the choice facing N.Ireland, Scotland or Wales if they were to breakaway from the UK Exchequer tomorrow- punitive income tax (at least 45% plus) or drastically reduced education, health and pension provision- strangely enough, that is the kind of fact rarely heard in the independence debate.

As a UK Unionist, I acknowledge a change in attitude and philosophy is required- if those figures I quoted earlier don’t change, then the United Kingdom is quite clearly never going to reach its full economic potential; but if the will is there, given the size and strength of the UK economy, then changes are very much achievable and without a great deal of the pain that would result from Scotland, N.Ireland (with the Republic’s "help") and Wales attempting the same task on their own. But in the meantime, a great deal more honesty is required from the SNP, Plaid Cymru and Sinn Fein regarding the economic consequences arising from of the break-up of our nation.