Economics of Independence

The only certainty with Brexit is a second independence referendum

Economic certainty with Boris Johnson?

Is the UK determined to damage Scotland’s interests for its own narrow-minded agenda?

Into the chaotic shambles that is Brexit one almost cast iron certainty is emerging, that there will be a second independence referendum before the UK leaves the EU.

The UK is wed to a political system of governance that no longer works and an economic dogma that has been proven wrong and seems unable of reform. Harking back to an imagined self-importance and global influence that doesn’t match reality, it has voted for Brexit, allowing ego and a Trump-esque outdated British nationalism to lead us to an act of international and economic self harm. Independence was rejected by many with a heavy heart. They felt (wrongly, it emerges) that the UK offered more economic certainty and that more powers would mean Scotland could protect itself from the diverging political direction of Westminster. That hope has been ruthlessly exposed as a myth by Brexit, which has laid the bare utter powerlessness of the Scottish Government to protect us when the UK is determined to damage Scotland’s interests for its own narrow-minded agenda.

The key question in 2014 for the heavy hearted was what option offers most certainty. The only certainties post-Brexit UK can offer Scotland is uncertainty and the growing dominance of a deeply negative British nationalism and xenophobia that is the antithesis of the international civic, environmental and socially enlightened independence movement. It doesn’t take a genius to see that the Union will have a weaker argument in indyref2 and if the economics of independence can be better explained, and EU membership or access to the single market made more of a certainty by the Yes campaign, then the No campaign won’t have a leg to stand on. The truth is that there is very little choice in the paths each party and nation can take.

Will Theresa May listen to Nicola Sturgeon in negotiations?

Will Scotland really have a voice in the Brexit  negotiations?

Theoretically Theresa May has three choices: 1) Allow Brexit to be stopped by a Parliamentary vote or more likely a demand for a second referendum on the result of negotiations. However that would mean two years of negotiations, six months campaigning and then in the unlikely event of a rejoin vote (we are out after two years) the UK would have to re-apply for membership and probably be told it’s not welcome back. Chaos and uncertainty would dominate trade and economics for 3-4 years, and so even if the UK voted to rejoin, Ukip would triangulate the Leave vote and probably form the next UK Government. 2) She could go for for a soft Brexit, remaining in the single market and the customs union, with freedom of immigration, and follow all the EU’s rules without having any influence on them whilst paying a trade levy akin to the current EU membership fee. Once again Ukip and at least half of the Conservative membership would label it a betrayal of democracy and she’d face the next General Election staring down the barrel of a Ukip/rebel Tory majority with a mandate to dismantle the deal she just negotiated. 3) Or she can go for a hard Brexit, position herself as the champion of democracy by respecting the result, showing strong leadership, triangulate the Ukip vote and ensure Tory majorities for generations as Labour disintegrates. A true believer in her own political dogma, she will believe that this will allow her to cut through the Brexit jungle with cold Tory neo-capitalist steel and rebuild Britain in her own image. You see she really has no choice at all.

Neither does Nicola Sturgeon. The UK is taking Scotland out of the EU against its will and her manifesto said that would trigger indyref2, but she can’t call it as Brexit hasn’t happened yet and despite the almost mathematical certainty of a hard Brexit, she can’t fight a battle till she knows where it’s going to be, who will be on her side and what weaponry the opposition have. That is why the Scottish Government has to examine all options and keep the door open to the heavy-hearted No voters and show them that it is Westminster and not Holyrood that is closing the door in their faces. If the UK Brexits and Scotland can somehow maintain EEA or EFTA membership then we would be leaving the political union element (if there is such a thing) of the EU but not the trading union, thus providing a case study for independence, leaving a political union but not damaging the economy by maintaining the trading union. However if a special deal then is done, Scotland would have a massive economic advantage over the rest of the UK. As many as 50,000 finance jobs could move here from London, major companies would relocate here to access the single market, our economy would grow faster, our deficit shrink more quickly than the rUK and increased EU trade would compensate for the rUK economy entering a self-imposed recession. Devolution max/near federalism would be required to make such a deal workable and so Scotland would be all but independent at the point of Brexit. It would be just a matter of time before Scotland’s status as a fully sovereign nation was rubber-stamped, as there could be no argument made for rejoining a self destructing UK.

Decisions on whether desirable for Scotland to join the EEA

If a hard Brexit is agreed, then EFTA/ EEA ia the best option for independent Scotland

So just as Nicola Sturgeon has no choice but to seek a special deal maintaining some form of access to the single market, Theresa May has no choice but to make absolutely sure Scotland doesn’t get that deal. Finally neither UK or the EU can afford to lose trade, so they can’t afford tariffs, but the EU must punish the UK for Brexit, so Guy Verhofstadt also has little choice but agree a Brexit that allows limited single-market access. However that deal will almost certainly also mean a loss of UK financial passporting and many other smaller economic penalties for the UK to protect the EU. It therefore looks likely that some form of heavily caveated UK access to the single market will be agreed and so Scotland as an independent EU member would be able to maintain and boost trade with the UK and EU simultaneously making independence truly inevitable.

If a super-hard Brexit were agreed with hard borders and tariffs then EFTA / EEA membership is the best option for an independent Scotland, hence Nicola Sturgeon is keen to promote it as a credible option right now. It’s the economic lifeboat we will need to board if the UK decides to steer the good ship Britannia full speed at the super-hard Brexit iceberg.

About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland he ran a small social media and sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and The Huffington Post.

9 Comments

  • I do enjoy reading future political possibilities from writers that actually have a clue, but for me the most important line in the article was “indyref2 and if the economics of independence can be better explained ” – without the economics of a future independent scotland being made clear in simple terms that working class and middle class alike can truly visualise and understand then the NO’s will win again. Much work needs to be done on this and I for one would be happy to donate to any Indy organisation that takes it on – BFS maybe ?

  • interesting….but I would dispute “Ukip would triangulate the Leave vote and probably form the next UK Government.” I know that Farage has an alt-right ego the size of Leave’s bus, but how would they accomplish that? They had a lot of votes, but managed one (rebel tory) MP? Farage has had 7(?) goes at it so far, and he’s still outside the system- apart from his salary in Europe. UKIP loses ‘capable’ leadership like a gabling addict on payday. OK, the tories are still scared of them, as we can see from their conference speeches, but how could this happen- I don’t believe they have the online nous of a trump…..

    • I think UKip of another party formed by tory defectors and UKIp remnants would be in a strong position so yes just saying UKip is simplifying it a bit.

  • Great comment and spot on, I am an English man who wants Scotland’s independence so much, why should the Scots be ripped away from a future just because of outdated English ideals that will never re-be.
    The only thing I would like to add for Theresa May is:
    It is better to debate a question without settling it, than settle a question with outdebating it.
    I hope you Scotts break free and you will then thrive, remain and you will suffer for a nation that has no real commitment to your future, it leaves the EU, but tells you you cannot leave the Uk, oh, by the way you are an equal partner in the Uk nation

    • 100 per cent with you on your comment on May. It is only what she thinks that will be implemented, forget the Scottish nation

  • My personal feeling is that Westminster will bend over backwards to remain in the EU and as SNP have as much said Scotland must remain in the single market rather than the EU in its entirety as the people of Scotland voted for ? May will join the single market and then say well Scotland you got what you wanted what’s your problem?
    Keeping the City of London happy and scuppering our independence in one fail swoop

    • Independence is not dependent solely on whether we remain or not in the EU.
      It depends on terms of remain post Brexit too.
      If no further powers come to Holyrood, for example, then all roads still lead to independence.

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