Brexit damage to Scotland's economy will drive up Yes vote

The latest poll by YouGov shows increased support for independence, up from 46% pre Brexit to 47% but that is a little disappointing, (even they excluded 16 & 17 years olds who are majority previous Yes voters). However, that poll doesn't surprise me, as the SNP have emphasised the wrong message on Brexit. It is not simply the fact that Scotland is being dragged out of the EU that will change the polls, it is the economic damage that Brexit will do to Scotland that will increase support for independence.  That damage will take time to materialise but it must be highlighted by the SNP, something they are so far failing to do.

Wealthy No voters who will only change their minds if they think independence represents less financial risk than remaining with UK and OAP's will vote for the solution they think will better protect their pensions. Neither of those key target groups give a dam about workers rights and freedom of movement, or the niceties of European co-operation - for them its economy, economy, economy. 

The post-Brexit UK economy is taking on water and looks likely to sink into recession and we need to make it clear that Scotland needs to man the independence lifeboat. I agree with Nicola Sturgeon’s key interests to be protected, but if doesn't emphasise the vast economic dangers of leaving the EU the polls won't move to the level required to trigger a second referendum.

Many voted No in 2014 because they believed it offered economic stability and the Scottish Government needs to make them aware that Brexit makes their nightmares more likely and that independence is now the economic opportunity of a lifetime. Without that change in message, independence won’t happen. Yes and No can now both take 40 per cent support to the bank, it’s the 20 per cent that are willing to change tier minds  - based on how they perceive the impact on their own finances  - which will decide if Scotland sinks or swims.

Figures published this week include historical pre-Brexit GDP data showing the UK economy was recovering and manufacturing was making a comeback, as well as PMI data collected post-Brexit which projects the future state of the economy based on current purchasing managers decisions. The GDP data has been presented in the anti-EU/right-wing press as proof the UK is weathering a Brexit well, when in fact data only shows how the economy was performing before the Brexit vote. The PMI data predicts the UK economy will fall sharply in the quarter immediately following the Brexit vote, and if this continues the following quarter the UK economy will have entered recession.

Most worrying is that the PMI score of 47.4 (below 50 shows economic decline) for the UK services sector is down from 52.3 in June, itself an 88-month low. The manufacturing sector which had a record month in June (pre-Brexit) has now hit 49.1, a 44-month low. France, which recently overtook the UK as the world’s fifth largest economy, has a PMI of 50.3 and Germany has an overall PMI of 55.3. The EU as a whole has a PMI of 52.9, which is an indication of remarkable resilience in the EU economy to the prospect of the UK leaving while the UK’s economy is teetering on the edge.

So in other words, the economic indicators show the Brexit vote has had the effect of slamming the brakes on the UK’s economic recovery and putting it into reverse, while the EU is doing rather well.

It is hard to see any EU trade deal having an impact on the UK’s economy that doesn’t fall within the bracket of slightly damaging at best to disastrous at worse. For Scotland’s economy however the picture is even darker, partly as the EU compensated Scotland for the lack of Westminster investment by giving Scotland 17.4 per cent of all the EU grants to the UK when our population share and membership fee was only 8.4 per cent and partly because our exports to the EU of about £11.56bn (up 36 per cent to £3,070m per year since 2005) are far more important to Scotland’s economic prospects than to the rUK overall. Also having had several record years of inward investment recently, many companies are located in Scotland as it currently gives them access to the EU single market and if that changes there could well be an exodus.

Let’s be clear: there is no deal the UK Government can make with the EU as non-members which would improve on the benefits of membership for Scotland. Indeed to get the best deal for England, Westminster may sacrifice Scotland’s economic interests such as fisheries access.

Against this backdrop, we can see that Scotland being ripped out of the EU against it’s wishes amounts to a deliberate act of economic vandalism and a case study in the damage and disadvantage that flows from Scotland’s lack of self-governance. Nicola Sturgeon’s lists of key interests that must be protected underplays the economic dangers that Brexit exposes Scotland to.

The Scottish Government must demand that UK Government officially informs the EU that Scotland can be represented by Sturgeon in direct negotiations on all options (including independence) that would maintain Scotland’s EU membership. They should also demand assurances that the UK Government will not simply use access to Scottish fisheries as a bargaining chip for better conditions for London’s finance sector, given the promises made to the fishing sector in the referendum by the Vote Leave campaign. The UK Government must also commit to replacing all EU grant funding to Scotland and creating an enhanced capital investment fund large enough to compensate Scotland for any economic losses due to the Brexit. Trident already having been voted through will place additional stress on Scotland’s budget but given that several billion of Scotland’s nominal fiscal deficit is related to shared services and costs of being part of the UK, Scotland’s contribution to expensive infrastructural projects that don’t benefit Scotland must be re-examined. 22 is a hugely expensive project with no economic benefit (indeed it would be detrimental) to Scotland and cannot be allowed to impact on Scotland’s finances – if English votes for English laws is appropriate so is English money for English projects.

For the most part the people of Scotland are blissfully unaware of the significant risks from Brexit to Scotland’s economy. Scottish jobs will go and our ability to afford social protections will lessen significantly if we do not maintain our EU membership and it looks more certain by the day that independence will be the only option. Nicola Sturgeon and her SNP Government need to communicate in no uncertain terms the potential economic damage to Scotland leaving the EU whilst remaining part of the UK.

She also needs to point out that the powers of independence, coupled with the economic advantages of unfettered access to the single European single market can radically improve Scotland’s fiscal position and grow it’s economy significantly faster than the rest of the UK. The choice facing the people of Scotland now is simple: to become a wealthier, healthier, fairer, greener, more secure and internationally focused independent nation or to be a poorer, unhealthier, unequal, and unsustainable region of the self destructing and increasingly insular and insecure UK.

Update: Victory - Since the UK government has now been forced to admit that HS2 will never reach Scotland.  The civil servants who compile the GERS report have confirmed to Business for Scotland that they will now refuse to accept any contributions to the cost of HS2 on Scotland's behalf.


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