Scottish Secession: The Brexit Factor

Not quite two weeks ago, in a high turnout election, the United Kingdom voted to leave the European Union. One of the potential second order effects that's been discussed is a second Scottish secession referendum. I've spoken with Gray 1 up in Orkney, and The Director in Aberdeen, and wanted to share some thoughts, mainly on the prospects for a second Scottish referendum.

Politics: While the Scottish National Party (SNP) still control the Scottish Parliament, they recently lost their majority and a great deal of political capital. The previous referendum campaign was premised upon the SNP's majority, so the fact that the SNP has lost that majority, and the referendum (and not narrowly), doesn't bode well for another referendum. Based upon politics, the prospects for Scottish secession have not improved since the referendum, and have probably deteriorated.

Currency: During the 2014 referendum, the "Yes!" campaign claimed that an independent Scotland would retain the pound as part of a currency union, while the "Better Together" campaign and UK government denied that there was any prospect of this. If Scotland seceded in order to join the EU, a sterling-based currency union would be impossible, and Scotland would likely be saddled either with the Euro, or with its own national currency. At present, the sterling is down, but it has historically been stronger than the euro and is likely to rebound in the long term. Based upon currency, the prospects for Scottish secession are worse in 2016 than they were at the time of the referendum.

Borders: According to The Director, if Scotland were to secede from an EU-independent UK, the remainder of the United Kingdom would have no choice but to erect a formal border between England and Scotland. This is especially true in light of the ongoing EU refugee crisis, which probably contributed significantly to the Brexit vote. While some of Scotland's trade and immigration is with the United Kingdom, most of Scotland's goods and people move between Scotland and England. Based upon borders, the prospects for Scottish secession are worse in 2016 than they were at the time of the referendum.

Defense ("Defence"): The "Yes!" campaign made contradictory claims: that Scotland would evict the UK's Trident deterrent, but that Scotland would be grandfathered into NATO. NATO made it clear that Scotland would not be grandfathered into the alliance. The SNP has not softened its anti-Trident stance in the last two years, but Russia has become more aggressive by supplementing its pre-referendum intervention in Crimea with its post-referendum intervention in Syria. Occasional interceptions of Russian military aircraft violating NATO and UK airspace continue. Based upon defense ("defence"), the prospects for Scottish secession have not improved since the referendum, and have probably deteriorated.

Energy: As I mentioned ad nauseum between 2012 and 2014, the "Yes!" campaign premised its case for secession upon high oil prices, which were going to be used to turn Scotland into a socialist welfare wonderland. In September of 2014, oil was averaging $95.85 per barrel, down from a high of 117.78 in March of 2012. At present, it's at $45.94, and the BBC News North East, Orkney, and Shetland feed posts several articles per week about how poorly the North Sea energy industry is doing. Since the energy industry downturn, there have been repeated observations in politics and the media about how inaccurate the SNP pronouncements were. Based upon Scotland's economy as a function of energy prices, the prospects for Scottish secession are much worse in 2016 than they were at the time of the referendum.

Union: Finally, there's the state of the EU itself. The fact that the majority of the UK, narrow though that majority may have been, voted for secession is an indicator of the health of the EU. The more influential EU powerhouses, mainly Germany, have expended a great deal of political and financial capital in the last five years to keep the EU afloat, and particularly to keep bankrupt Greece and other nations in the EU. In addition, the migrant/refugee crisis and the problem of unsecured borders has strained the EU's credibility. Brexit may be a one-off, but it could also trigger referenda in some of the other backbone members whose economies the EU needs to survive. With this degree of uncertainty about the future viability of the EU, the temporarily chaotic British economy may very well be a better bet for Scots than a mad dash to reunite with Europe. Based upon the health of the EU, the prospects for Scottish secession are much worse in 2016 than they were at the time of the referendum.

I don't know if there will be another referendum; and if there is one, I don't know how it will play out. What I do know is that, to quote one of my contacts, "The case for Scotland being an independent nation is now weaker than ever." I suspect that if Westminster can stall for long enough - and given that the SNP billed the 2014 referendum as a "once in a lifetime opportunity", that shouldn't be too difficult a proposition - then talk of a second referendum will probably die down to a dull roar for the time being. But, I suppose we'll just have to wait and see.