On the 18th of September 2014, 55.3% of Scottish people decisively voted “No” to the prospect of an independent Scotland. The so called “once in a generation” plebiscite was supposed to close the case on the matter for the foreseeable future. Fast forward three years and we have a new Prime Minister, a new First Minister and a UK coming out of EU against the wishes of 62% of Scots. The political scene has changed and, according to Nicola Sturgeon MSP, so have the minds of the Scottish people.
Like any peaceful independence debate it is one of the head and the heart. In this case the head is making the economic case. In 2014 a ‘Yes’ vote meant a vote for an uncertain political relationship with the EU. The British EU referendum changed all of that and now the ‘No’ camp offers a bleak future for the 62% of Scottish voters who voted to remain.
Simon Wren-Lewis, Professor of Economics at Oxford, say the economic case for Scottish independence rests on whether an independent Scottish government can negotiate a way of rejoining the EU once the UK has left.
In an interview with the FT, Wren-Lewis noted that “The economic cost to the UK of leaving the EU could be as high as a reduction of 10 per cent in average incomes by 2030. If Scotland, by becoming independent, can avoid that fate then you have a clear long-term economic gain right there.”
If an independent Scotland could rejoin the EU, or at least negotiate a preferential trade deal, then Scotland could replace the UK as the trade gateway to the EU.
However with oil revenues taking a decidedly nasty turn since the last independence referendum, the nationalists’ economic argument for an independent Scotland ends here.
Two-thirds of Scotland’s non-oil exports goes to the UK, accounting for 30% of Scotland’s total output. In contrast, trade with the rest of the EU only accounts for 16% of Scottish exports. A Scotland within the EU trade bloc may not be enough to offset the damage done by severing ties with the UK.
Independence would also knock Scotland’s public sector. Public spending per head is £1200 more per year than any other part of the UK. This is despite Scotland raising £400 less in tax per head per year than the rest of the Union.
According to the Scottish government’s most recent financial accounts, Scotland would have run a deficit of 9.5% of total national income in 2016 if it was an independent nation. This in contrast to the wider UK which only has a deficit of 3.8%.
While leaving the EU against their will is unacceptable to many Scots, the potential damage to trade and the likely detriment to the public purse of leaving the Union could prove too high for much of the Scottish public.
However as Brexit has shown, expert-backed economic arguments alone are not enough to sway a referendum. Alas, this could well be another ‘referendum of the heart’. After all, Scottish zeal for independence does not come from a desire for more prosperity, it comes from a desire to end the rule of the Westminster Government, a government that only 14.9% of Scots voted for.
Despite geographic closeness and significant fiscal subsidy, England and the rest of the UK remains culturally and economically distant for many Scots. The English fervour for Brexit only deepened this divide.
If Theresa May grants Scotland a second independence referendum, a prospect still far off her agenda, Sturgeon must win Scottish hearts to finally beat British heads.