A ‘nightmare for Scotland’

Confusing Scottish independence with the EU referendum is not helpful. It encourages people to make a decision on one thing based on an opinion about another. This may appear clever but it doesn’t stack up.

There is a common view that England voting out while Scotland votes in will prompt another independence referendum. Nicola Sturgeon has said a rerun of 2014 would be “inescapable” in such circumstances.

Such a result in the EU referendum would be disastrous for everyone and catastrophic for Scotland.

There are lots of technical legal reasons why this apparently “inescapable” independence referendum would actually be quite hard to stage – Nicola still doesn’t have the power to call such a vote. However, that’s not what is important.

What matters is that imagining an England out of the EU conjures up a nightmare for Scotland.

Assumptions

The SNP’s model for independence rested on a number of assumptions. Few of those core arguments survive if England leaves the EU.

Sharing Sterling would be a nonstarter if England were out and Scotland in.

There would be no “it’s our currency too” malarkey – basic economics would kick in. You couldn’t use a currency whose value was determined by England’s ability to compete with the EU while actually being in the EU.

That would mean Scotland would have to choose a currency – and most likely would have to settle on the Euro. What other choice would it have?

There are people who argue for an independent currency but it is incredibly hard to see how such a thing wouldn’t be speculated to death by global currency markets.

If Scotland had to use the Euro it would have to accept the debt restrictions which go along with that.

This would mean Scotland couldn’t borrow to make up its spending shortfall to the level needed to keep services at the current provision – in other words, Scotland would have a financial hole.

The existence of this financial hole could be disputed in 2014 because the scenario was speculative and any manner of data could be used. If it was a question of joining the Euro, then there would be clear rules with which to measure Scotland’s economic strength. The hole would be real.

So independence in the EU would come with the assurance of either higher taxes or a structural adjustment to Scotland’s standard of living (never too wee or too poor, just not rich enough).

Maybe that new model of independence could be sold to the people, who may feel it is a price worth paying for forging our way in the world. However, that is not even half of the picture.

The biggest issue by far is what England would be like out of the EU and expecting to be independent of Scotland. It would soon realise that it is not the EU which has undermined the nation state but globalisation.

England would need to find advantage in the global market place.

It would do this by building on its existing assets – acting as a tax haven and financial services provider.

Put more simply, the City would be given free reign. The hope would be that London would suck in money and try to act a bit like a Hong Kong to China pre-1997.

To do this it would cut VAT and corporation tax and remove some employment regulations.

If it did any one of those things, let alone all of them, the much smaller Scottish economy would find itself scrabbling to hold on to businesses which locate according to global advantage, not national sentiment.

Further, the distribution of UK assets would become a highly charged thing.

Not so amicable

Both England and Scotland would be setting out on new paths and would want every advantage they could claim. What was sold as an amicable separation in 2014 would no longer seem plausible.

If it was hard to imagine the “fairer, kinder” version of Scotland surviving the 2014 process of independence, it is impossible in this new scenario.

As England shifted to the right, Scotland would inevitably follow. It wouldn’t have the money to pay for the better society and policy makers in Edinburgh would be at the mercy of tax cuts from London, making our independent neighbours to the south more competitive.

Anything is possible but it is incredibly hard to imagine Scots voting for independence in the European Union if England is not a member.

Scotland’s economy requires a levelplaying field within this island. Should England leave, then the entire nature of Scotland’s debate changes.

If England votes to leave the EU and Scotland to stay there may well be a moment of indignation and a spike in nationalist fervour but the reality is that it will also signal the death of the Scottish independence dream. Which leaves Nats in a paradox. To win the EU vote across the UK, they have to embrace an argument about how, in a globalised world, the powers of the nation state are limited and the future is about cooperation.

If they fail, they probably kiss goodbye to their own grand schemes.

The much smaller Scottish economy would find itself scrabbling to hold on to businesses

Picture: Getty Images. The skyline of Hong Kong, a place England may try to emulate if it becomes independent of the EU – and Scotland.