Can an Ageing Scotland Afford Independence?

In the light of the current Scottish independence debate, much attention is being paid to whether Scotland and the rest of the UK (RUK) will be better off after the separation. Fiscal challenges are often quoted as a strong argument against independence. Demographic processes play an important role in determining future economic growth via their impact on labour market, saving behaviour and government budget. One of the arguments that have been raised during the debate is that Scotland is in a worse demographic situation than RUK, and independence will make it harder for it to provide for its ageing population. In 2012, the old-age dependency ratio1 (OADR) in Scotland and RUK was the same at 29%. However, in the future the Scottish population is projected to age more rapidly, and by 2037 OADR in Scotland will reach 48%, while in RUK 45%2. However, by 2050 OADR in two regions will converge again.