Economics of Independence Scotland's Economy

The No Campaign borders on hypocrisy

Apparently excessive border checks are illegal

Welcome to Scotland PLCA couple of years ago, I had a client based in Eupen in Belgium. The best way to visit them was to fly to Dusseldorf before being picked up and driven to Belgium.

I asked the driver “when will we cross the border?”

To which he replied “about ten minutes ago.”

“How do you tell?” I pressed.

“Oh its easy” he replied, “did you notice it got light? “Well Belgians have street lights on the motorway and the Germans think it’s a waste of money, when it got light that was Belgium.”

This experience seemed a little strange to me at the time but it occurred to me that lots of people catch the ferry from Scotland to Ireland and I have crossed the border between Eire (aka Southern Ireland) and Northern Ireland by bike, train and car without any border checks. Indeed, a little research confirmed that even at the height of the “Irish troubles” there were no passport checks and people crossed the UK/Eire border to work and to see relatives and friends on a daily basis. The UK has a freedom of movement and open trade border with Eire, without any barriers to business or checks or import duties etc.

So we agree, no trade barriers and no border controls - Yes Prime Minister

So we agree, no trade barriers and no border controls – Yes Prime Minister

Moreover, this agreement has been recently strengthened. London and Dublin have boosted the historic free movement agreement between the UK and Eire as part of wider UK and Irish plans for closer economic co-operation. Dubbed a “mini-Schengen area”, business people, travellers, tourists and goods can move freely between the two independent counties without border checks or any trade barrier whatsoever. This is important to the UK economy because, although Eire is a lot smaller and less important a market for UK goods than say Scotland is for English goods, bilateral trade between the UK and our friends and neighbours in Eire is worth around €50bn a year. The two countries are even discussing joint trade missions to the fast growing BRIC economies and even embassy sharing in some places in the world.

When the No Campaign talks about Scotland’s borders they claim that a small independent nation within the EU will be forced to join Schengen area (a group of 26 EU member states with open borders since 1995). However, Eire (which has a smaller population than Scotland) has an opt out from Schengen, Why? Because it already has a pre-existing free movement and trade agreement with the UK. Scotland has the same pre-existing agreement, not just with the other countries of the UK but also with Eire and so ipso facto an independent Scotland gets an automatic opt-out of Schengen as well. The precedent has been set under EU law.

The No Campaign tell us that an independent Scotland wouldn’t be able to keep its existing three big opt outs from EU agreements because they only exist as a result of the UK’s size and influence in Brussels, but not only does 4.5m population Eire have a Schengen opt-out, Denmark with a remarkably similar size population as Scotland has four opt-outs including not being forced to use the Euro.

Never letting facts get in the way of a good scare story, the No campaign went into overdrive earlier this year when Home Secretary Theresa May said “Scots may face checks at the English border.”  Meantime, Scottish Secretary Michael Moore has claimed Scotland’s border controls would be a “complete nightmare” after independence, with the prospect of minor roads and farm tracks being patrolled. Now that is bordering on the ridiculous!

The Gibraltar question and the gratuitous battleship images.

Apparently excessive border checks are illegalThe UK government is apparently only a fan of border checks and patrols when it comes to Scotland. In contrast, it is considering taking Spain to the highest court in Europe because they have decided to carry out border checks.

David Cameron’s spokesperson said “the Prime Minister was very disappointed by Spain’s failure to remove the border checks and that unprecedented legal action through the EU would be considered.”

What I also find irritating is that Gibraltar related news in the last few weeks on the BBC has carried images of a series Royal Navy ships heading for the peninsula. Now, we all know that there is no chance, I mean absolutely zero chance, of the UK entering any form of military conflict with Spain, so why the gratuitous aircraft carrier shots?  Well, apparently that’s what brand Britain still stands for in the BBC. We can’t have an international disagreement even a minor diplomatic one without some reference to military power – that is the Westminster system and London establishment’s way, and the BBC often (possibly unintentionally) acts as the standard bearer for British nationalism.

From the BBC article on the Spanish border disagreement: A Royal Navy taskforce has left UK ports on a routine deployment. One of its ships – HMS Westminster – will stop in Gibraltar.

But who would a trade barrier hurt?  

We are often told that Scotland exports a lot to the rest of the UK (rUK) and it does, taking an average of the variety of estimates of exports and imports between Scotland and rUK, we can see that Scotland exports around £47.5 billion of goods and services a year.  BUT (that’s a big but) HM Treasury’s using experimental data to estimates that rUK exported £49 billion in goods and services to Scotland in 2011.

Trade barriers hurt the UK as much as Scotland!  Not only do the No Campaign’s London focussed politicians need to wonder how they will get re-elected when English companies lose nearly £4bn a month in orders but much of Scotland exports to the rUK are energy based with the rUK purchasing 3/4 of our gas and at least 25% of our electricity.  So the rUK would have a massive energy deficit with up to 35% of its long term energy requirement (and a higher % of its renewable energy requirement) either unmet (leading to electricity rationing in England) or subject to self imposed trade barriers.

In essence, if you are thinking of voting No because you believe that the current batch of Westminster unionist politicians are capable of committing economic and political suicide, then you should perhaps also be asking yourself why you are planning on voting no and leaving politicians that are that incompetent in charge of Scotland?  Either they are misleading us or they are incompetent!

Conclusion  

So, according to the No campaign, other countries who are already independent can trade with the UK without borders (or we will emphasise military might and threaten to sue them).  Independently governed countries within the British Isles can have no passport patrols, no trade barriers and no big wire fence with sniper towers and border patrols but if Scotland decides to govern itself and stop subsidising the UK with our 9.9% of UK taxes generated from 8.4% of the UK population then we will have to queue at the border.

Bizarre to say the least, especially as exports to Scotland from the rest of the UK are vital to the rUK economy and trade barriers would sink the newly independent rUK economy. The rest of the UK would suffer an energy deficit if it wasn’t able to freely purchase energy from Scotland so if they were to implement trade barriers and border controls that they themselves claim would be illegal under EU law there would be the risk of blackouts in England’s major cities!

Is the No campaign’s border hypocrisy the most ridiculous of recent scare stories or can you think of a worse example?

All undecided voters should ask themselves, if there is a positive reason for Scots to vote to remain in the political union, then why can’t the No Campaign come up with one? They can’t because there isn’t one, hence the increasingly desperate reliance on absurd and ridiculous scaremongering.

 

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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.

17 Comments

  • A Tory MP has rubbished anti-independence scare stories about border checks and travel problems between England and Scotland following a Yes vote.

    Richard Bacon, Conservative MP for South Norfolk, on Sunday Politics East, said:

    “Well I think, this idea, this, one of the people in the clip said, ‘travel is going to get more difficult’, I mean pull the other one, is it suddenly going to get more difficult to get on a train? Are we seriously thinking that if Scotland becomes independent there will be passport checks on the border, well no not necessarily at all there will not necessarily at all, there are of plenty parts of Europe where there are no passport checks, when you go from France to Germany, or from Luxembourg to Belgium and I see no reason why that should necessarily happen within this Island.”

  • There will be no border or passport controls because Tesco, Asda, the Coop, Morrisons, Sainsburys and Morrisons won’t allow it.

    They invest heavily in Scotland and do disproportionately well from their Scottish stores and also are the major paymasters of UK political parties.

    Lidl and Aldi are just waiting to pounce.

    The Gregg’s dummy is safe!

  • The only way we would get border controls between Scotland and England is if the isolationist rabid-right gain power in England and they close the borders. In which case border checks will be a small price to pay for not being a part of that society. I love the way the No people tall of being ‘forced’ to join the Schengen agreement like it is some terrible threat. 26 EU countries see the advantages of not having to have border controls with their neighbours. Westminster sees that as a bad thing.

    • Graham, I agree my point is that we cannot be ‘forced’ to join the Schengen agreement. Ironically to maintain open borders with the rest of the UK we are actually forced not to join Schengen. Whether there are any benefits / problems with Schengen economically is a different subject altogether.

  • The way that the National Grid is funded is based on a pay-in tariff per unit of electricity. This tariff varies on the distance from London. the closer to London the lower the tariff until bizarrely you receive a negative tariff or in plainspeak a cash bung.

    Scotland’s electricity actually pays over 50% of the cost of the National Grid.

    It is a hidden subsidy to London and the South Eeast of England.

    • This is very confusing. Do I pay more for my electricity in a highland house beside a hydropower plant than for electricity used in a flat by the Elephant and Castle?

  • i would like to see the scottish government publish in detail all that they have done for scotland over the years. as i have found a lot of elderly people are under the impression that the scottish government is responsable for the bedroom tax and the cuts in welfare benefits. and the threat to their pensions. and the bus pass. they need to have it explained to them as simple as possable that its that cmeron swine thats doing this.

    • Talk to the BBC. This is an example of how silence can be as great a propaganda weapon against the Yes campaign as half truths and all the other typical black arts being employed by the BBC.
      Regardless of what information the Scottish Government produce the BBC is the disseminator of the information.
      The BBC is probably your greatest enemy and unless neutralised will provide victory to the No campaign.

  • Let me make another point. In the days before the Euro, The Republic of Ireland’s currency, the punt, was linked to the exchange rate of the pound sterling. As a result we here in Northern Ireland could use our british pounds in the ROI and vice versa without any trouble. There would be no reason why the same could not happen if Scotland votes for independence.

  • After reading Mr Kemps article, if we could get that story out into the public domain via newspapers/tv/etc Scotland would have a very much greater chance of independance than we have at the moment.

    • You will not get the information out through the ‘public domain via newspapers/TV’. Why should the British State allow its organs of communication be used to undermine its opposition to independence? You are asking the state to give up one third of its land mass, 90% of its oil reserves etc. etc.
      Get real, the British state has committed heinous crimes in the past to thwart independent aspirations by other countries and you think they are going to give free access to their BBC.

  • one of the best articles yet …anyone that votes NO after reading this needs to have their head’s examined

  • The UK simply couldn’t create a Sovereign Wealth Fund back when Norway did. To do so would have become an expicitly stark reminder of just how much revenue was flowing south, undoubtedly fuelling the desire for independence.

    The point is that Scotland would have had, as McCrone predicted, an ’embarrassingly large surplus’. (From 1980 to 2012 the surplus was around £116 billion, despite the deficits of recent years). Instead it seems we are liable for a £120bn share of a debt spent disproportionately outwith our borders and completely outwith our control.

    Had this surplus been available to us as an independent nation, is there any doubt that our country be a very different place than it is now? Partly invested in a Sovereign Wealth fund and partly invested in our communities, alleviating poverty and reducing unemployment, with the huge savings in terms of welfare and health spending, and far fewer of our young, brighest and most talented having to leave our shores to find prosperity.

    This is what we need to put across to voters, not just the hiding of our wealth, but the raw consequences of that, and not where we ought to be right now, but where we could be in 30 years from now, if we do take control of our own country.

    • Craig I agree – the main reason for not having a Scottish sovereign oil fund is that there would have been political pressure to invest a fair share of it in Scotland!

  • Another excellent article, Gordon.
    I’ve just been trying to persuade my accountant to change his opinion. Gave him copy of McCrone and the past 30 year tax figures. I’ll need to pass on your website address as well.

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