EU infighting shows that Scotland should be careful what it wishes for
Calls for independence may be back on the agenda but reality is yet to sink in for Nicola Sturgeon
Last week saw one major deal concluded, while another appeared to be slipping away. Meanwhile, one political union seemed to be strengthening as another seemed to be weakening. But things weren’t quite as they seemed. The deal that went ahead was between members of the European Union on a new coronavirus relief fund. The sums involved looked huge – namely €750bn (£683bn).
This looks like the beginning of fiscal union, with full political union following not far behind.
But it is just the first skirmish. In practice, the sums are not that large. The fund amounts to about 5pc of total EU GDP and is to be distributed over at least three years. And it comes with strings attached.
More important than the measures was the mood music. Now that the UK is out of the union, the remaining members are supposed to be free to move merrily on to closer union in accordance with everyone’s wishes, unconstrained by the foot-dragging and obstructionism of Perfidious Albion.
In fact, the summit was one of the most fractious in the EU’s history, with president Macron of France threatening to pull out. As it was, he accused the Dutch prime minister of taking up the role previously occupied by David Cameron. Nor was this just a protest. It was also a warning. “Look where Cameron’s behaviour got him” was Macron’s message.
Macron had better be careful. All along, Euroscepticism has been much stronger across the EU than its leaders let on. It was convenient to pretend that this was largely a peculiar British condition. Meanwhile, it was useful for the leaders of countries with strong anti-integrationist and Eurosceptic tendencies to hide behind the UK’s skirts and to keep quiet. With the UK gone, they have to fight their own battles and this has forced their anti-integrationism into the open. And the battles are going to be bloody.
If the integrationists’ apparent victory of principle is to mean anything in practice then there will have to be a lot more money spent on supporting the weaker members of the union.
The requisite sums are enormous. Italy’s GDP this year will be down 10pc – 3pc lower than when it joined the euro 21 years ago. The coronavirus has hit the country hard but this is not the fundamental cause of Italy’s plight.
In due course, the Netherlands and other frugal countries will be asked to finance the bailing out of a chronically weak economy unsuited to being in the euro. This is the fault of the EU’s integrationists.
Does anyone now seriously believe that if the euro wasn’t already here, the EU would need to invent it?
Meanwhile, it seems that negotiations between the UK and the EU over a trade deal when Britain’s transition period finishes at the end of this year have not been going well.
The UK Government is apparently preparing seriously for a “no-deal” exit, under which we would trade with the EU on World Trade Organisation terms. We definitely should be preparing for such a scenario, but I would not give up hope for a deal.
With the EU, the requisite concessions and resulting deals typically occur at the last moment.
But the most important thing is that although a no-deal exit wouldn’t be ideal, it would be far from disastrous.
It would mean that we would trade with the EU on the same terms as most of our non-EU trading partners, including the United States. Anyone who thinks that this would deal a devastating blow to the UK economy has clearly been living on the Planet Zog for the last five months.
Whatever temporary difficulties there are from a no-deal exit would be a rounding error compared to the devastation wrought by the lockdown.
The extent of the wrangling and ill feeling at the EU summit, coupled with the realisation that €750bn is a mere fleabite compared to what will be needed to stabilise the euro, should emphasise that we are well out of this union of impossibilities.
If we had remained, heaven knows what sums we would be obliged to cough up in future years.
This touches upon the fate of another union, namely the United Kingdom. Scottish opinion polls now show support for independence steadily above 50pc.
The fact that Scotland voted to stay in the EU and was outvoted by England certainly isn’t helping.
Moreover – at least as far as the presentation is concerned – Nicola Sturgeon, Scotland’s first minister, is widely perceived as having had a much better coronavirus crisis than Boris Johnson. The “i-word” – inevitability – is being frequently heard. When it comes to economics and politics, I am not much fond of the i-word. And I don’t think that another referendum in the next few years is remotely inevitable – nor its result if there is one.
Our exit from the EU makes the economic cost for Scotland of leaving the UK much greater. What is the point of trying to rejoin the EU – for that is what would be entailed – if that meant leaving the UK’s single market, which is much more significant for Scotland than the bloc?
This message has still not sunk in. It is one thing for Scotland to leave if the UK is still part of the EU.
That would continue free movement of people, goods, services and capital across the border. But that possibility is now gone for good.
Of course, there is more to life than economics, and when it comes to political unions, feelings of attachment, security and solidarity count for a lot.
Between the four members of the UK, those feelings have been sorely tested. But just watch what is going to happen in the EU over coming months and years. The lessons will not be lost on the Scots.
Boris Johnson, the Prime Minister, speaks next to a Typhoon fighter jet at RAF Lossiemouth during a visit to Scotland last week