Another exciting week at the IEA! This week, I helped put together a list of information on trade and Brexit in Scotland for our director, Mark Littlewood, as he prepared to be one of the panelists on BBC One Question Time. In fact, he’s live on TV right now as I am typing this!
The Brexit referendum’s results counted just over one million leave votes for Scotland (1018332) and the majority chose to remain within the EU. Consequently, the UK is exposed to wide divisions across its nations.
A second Scottish independence referendum is “more likely”, First Minister Sturgeon said, after Prime Minister May announced for a hard Brexit. A BMG poll for The Herald found an increase from 45.5% to 49% of Scottish in favour of independence.
However, looking closely, Scottish independence comes with great economic risks. Firstly, the rest of the UK accounts for 65 per cent of Scottish exports and is its major trading partner. A split means unnecessary trade barriers being erected between two regions, which could negatively affect Scotland’s GDP as much as 5%, Dr. David Comerford calculated.
Secondly, Scotland’s fiscal position continued to decline due to North Sea oil and gas revenue expectations plummeting. Expected revenues of £6.8 to £7.9b in the year 2016-2017 has been reduced to £0.5-£2.8b due to problems faced by the industry. Thirdly, Scotland’s budget deficit (6.2% of GDP) is currently over three times higher than the UK average and exposed Scotland to potential asymmetric economic shocks being in the EU without the rest of UK, especially if it is adopting the Euro currency.
Scottish National Party is determined to keep Scotland in the European single market. Their plan is to gain independence for Scotland, become a full or associate member of EFTA, and then negotiate an EEA agreement. Such plan is called the “Norway option”. Nevertheless, it is easier said than done.
Professor Michael Keating, director of Edinburg University’s centre on Constitutional Change, is firm that Scotland cannot go for the “Norway option” while the rest of the UK remains outside of the EEA because it is not an independent state. Even if such arrangement is possible, it would be extremely difficult, costly, time-consuming and create even more problems than a hard Brexit by introducing economic borders with England.
Sturgeon’s main argument to remain in the single market concerns with the free movement of people. Scottish residents may face restrictive barriers if they wish to study, travel or retire across the EU. As a counter-argument, free movement of people is much easier to resolve than free trade where the European Commission negotiates all trade deals on behalf of the EU member states, including the Republic.
And that was a sneak-peak at what kind of questions our director would be facing on the show! Other fascinating topics we had to cover included Trump and Brexit, prisons planning and Scottish politics.
Last Monday, Connor, Llew and I were invited for a lovely lunch hosted by Mrs. Sarah Basden, a member of Mannkal’s Advisory Council. The location was very special as it once belonged to Jane Austen and tucked away neatly in a town an hour and a half away from London.
The combination fresh air, large space, sunny weather, petting zoo and home-made meals became a luxurious getaway from the busy city, especially when I was feeling a little bit homesick. After that, we paid a visit to Stonehenge and headed home pleased and exhausted.
That’s all for this week. See you all again next week!
Writing from London with love,