Brexit Economics

The UK would have to strike a trade agreement with an independent Scotland

Written by Sam MacKinnon

Scotland is the UK’s second-largest national export market. With the dual economic crises of the pandemic and Brexit weakening the UK in the coming decade, London would need a free trade agreement with an independent Scotland.

Through the EU, the UK has unrestricted export access to 27 countries across the European continent, as well as 4 additional partners – Switzerland, Norway, Iceland and Liechtenstein – in the EFTA bloc. The EU also acts as a trading middleman between the UK and many international partners outside of the EU and EFTA. This is because the EU often operates as a single political unit in the world stage to increase its power in economic negotiations and secure a better deal for its members than they could possibly do so on their own.

Yet the EU’s role in facilitating UK trade with the world will end come January 2021 as the UK makes its final exit following the 2020 transition period. This has left officials in the UK government scrambling to secure its own bilateral trade agreements which will be terminated by its withdrawal from the EU.

So far, 20 agreements have been signed. This includes EFTA members, as well as Chile, Israel and South Korea, to name a few. But these 20 partners are structurally insignificant to both the UK and the global economy: together they account for just 8 per cent of UK trade. A further 18 trade discussions are ongoing, with players such as Canada, Singapore and Turkey – also structurally insignificant.

However, it is unlikely that the UK will be able to negotiate terms and secure signatures for trade agreements with these countries whilst such a large proportion of national resources are focussed on the Coronavirus pandemic. This is equally true of the structurally significant markets in the world economy, such as the United States, European Union and China, with whom the UK seems to have made few strides in building free trade agreements. Worse, in spite of this, the UK government is not interested in extending the Brexit transition period further into 2021 and has now missed the end of June deadline to do so.

The reality now is that, with just 8 per cent of UK trade covered and the pandemic creating few prospects of increasing this figure further before January 2021, the UK is heading for an economic calamity next year, as the economic effects of the lockdown collide with those of Brexit.

This decade will be a difficult one for the UK, as it attempts to stabilise and readjust its position in the global economy. What the UK cannot be is selective, hence why it has signed agreements and engaged in discussions with countries of relative insignificance. In short, it will try to cover as much of its economy as possible.

Tougher still, the UK government must deal with the reality of growing public support for independence in Scotland, and the idea of Scotland becoming independent in this decade. To counter this, the UK government – and many groups within civil society opposed to Scottish independence – have campaigned on the basis that Scottish independence would throw the country out of the UK’s internal trading market, plunging the new state into economic crisis. They deny the possibility of Scotland negotiating, as an autonomous entity, access to the UK’s internal market, as many countries have already done – with the UK’s encouragement – in anticipation of Brexit. This is based on the notion that the UK would refuse a free trade agreement with Scotland, a prospect they claim would hurt Scotland more than the remainder of the UK.

However, any reasoned analysis demonstrates that this is clearly just political posturing. To reassert, in this decade, as the UK withdraws from the EU’s common market and the long recovery from the pandemic begins, London cannot be selective in terms of who gains access to its national market, and what national markets it gains access to. In a weak position, it will be engaged in total crisis mitigation.

Given this, the remainder of the UK is unlikely to refuse Scotland entry to the UK internal market, as Scotland is its 2nd largest national export market (3rd largest if we consider the EU as a single partner).

The Rest of the UK’s Top 25 Export Markets Including Scotland (2018)
Partner rUK Exports (£m)
European Union


United States
























Hong Kong








United Arab Emirates




South Korea




Saudi Arabia










Sources: Office for National Statistics (2020); Scottish Government (2020). Note: This data includes both exports in goods and services for the year 2018.

Any decision by London to deny its second-largest national export market a free trade agreement would be madness in the current environment. Rather, the UK government will choose to be pragmatic, with its economic situation forcing it to accept the new political reality in the British Isles. London will quickly sit down with Scottish representatives to negotiate a trade agreement and prevent further destabilisation of the economy of England, Wales and Northern Ireland.


About the author

Sam MacKinnon


  • Would Scotland, as an EU member state be able to negotiate a trade deal with the UK without the EU commission ?

    • Scotland has already been removed from the EU by the UK against the wishes of the Scottish people. Thats means if it becomes independent will will have to apply to rejoin the EU, whereas that should be easy, as Scotland meets all the criteria and there is no waiting list etc, it will likely take two years or more. So Scotland will be free to negotiate access to the single market via immediate EFTA membership and will be free to negotiate with the rUK. However once Scotland rejoins the EU it will have the same trade deal with the rUK as the rUK has with the EU.

      If the rUK has hard border and tariffs with the EU so would Scotland (once in the EU) but that would also put the rUK economy into massive decline and dramatically lower the value of Sterling. As Scotland would either be using sterling or would peg its own currency value to Sterling then all goods from Scotland would be cheaper for rUK buys than goods from the EU and so trade would increase with the rUK not decrease and the rUK would be totally dependent on Scottish pil and gas and electricity supplies.

  • “Any decision by London to deny its second-largest national export market a free trade agreement would be madness in the current environment.” True, but madness and the Tory Brexiteer government go together judging by the stupidity of the whole Brexit enterprise, the refusal to consider an extension, and the headlong dash to a no deal Brexit. Given its track record, the UK government may well be mad enough to ignore Scotland. All the more reason for Scotland to seek independence and escape the madness, of course.

  • The “UK” wouldn’t negotiate with anyone post Scottish independence, for the simple reason it won’t exist.

    Once the two individual signatories to the Treaty of Union part company, the unified Kingdom of Great Britain will no longer exist in law; you’ll be left with the Kingdom of Scotland and the Kingdom of England & Northern Ireland. (The Kingdom of England has included the former Principality of Wales since the C16th).

    To continue to refer to the UK in the scenario discussed here is akin to refering to the Czech Republic as the “Federation of Czechoslovakia”.

    • Agreed but The Kingdom of England & Northern Ireland. (including the former Principality of Wales since the C16th) would have to strike a trade deal with an independent Scotland. Would have been a terrible headline!

    • As we are looking to leave the UK the headline made sense – we cannot stop the rest of the UK calling themselves the UK post-independence.

    • While i totally agree with that constitutional assessment, it is a fact that what we leave behind can call itself anything it likes.

      It WILL ‘keep the name’ Uk, as it needs to be recognised as the ‘continuer state called the Uk’, or risk losing the uk permanent seat on the UN Security Council, for example.

      However, by claiming to be the continuig uk state, they keep EVERY PENNY of historical debt/deficit, and as such, Scotland owes £ZERO upon independence.

      If WM tries to ‘force’ debt share on an iScotland, we simply demand asset share on EVERYTHING and instant removal of Trident.

      And remember, any asset sharing DOES NOT include Oil and Gas reserves, as those are geological assets, covered by international laws and agreements, and as such would be Scottish only and NOT part of a post indy asset split.

      The reality is, the EASIEST and cheapest ‘divorce’ plan for WM, is for Scotland to simply repatriate ALL our assets and revenues (including our stolen 6000square miles of seas) and call it quits.

      Every other scenario is financially more damaging for WM.

      We COULD allow a short term rental deal for Trident removal (shame to waste a powerful negotiating tool, should WM get ‘arsey’ with us).

      It is said to take 6 years to fit out a new Trident base and multiple £billions.

      So, offer them 4 years to move it.

      Cash up front annually of course.

      Year 1: £5bn

      Year 2: £8bn

      Year 3: £12bn

      Year 4: £15bn

      All clean up costs to be met by WM for Faslane, Coulport and Rosyth by Year 4 end.

      Any issues with payment/clean up costs, or trying to mess us around = Instant removal.

      Payment shouldn’t be an issue, they can always use yon £15bn/year ‘Scottish Subsidy’ they like to quote to us…

  • When Scotland becomes independent there will not be a United Kingdom of Great Britain and Northern Ireland. I don’t know what they will call it; perhaps the United KIngdom of England, Wales and Northern Ireland. The independence movement in Wales is growing, however, as is the movement in Northern Ireland to unite with the Republic of Ireland. So, when Wales becomes independent and Northern Ireland unites with the Republic of Ireland. What will remain is the Kingdom of Little England, the Republic of Scotland, the Republic of Wales, and the Republic of Ireland. Perhaps the latter three will form a confederation of equal independent states. England may wish to join the confederation. Would England be able to consider itself equal to the other states, or would it attempt to dominate?

  • Could you further expand on this with including the exports of England/Wales and the imports of England/Wales/Scotland for the same periods?

    • In time – reliable figures are hard to come by for Wales and NI in particular – more when we get answers to our questions.

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