The SNP ought to grasp that Brexit can hold the key to a brighter economic future for Scotland

The SNP ought to grasp that Brexit can hold the key to a brighter economic future for Scotland

Much has been made about the challenges that Scotland might face as part of a ‘hard’ – or ‘clean’ – Brexit. Both SNP Members of Parliament in Westminster and their MSPs in the Scottish Parliament have been quick to signal discontent with any status outside the EU’s Internal (Single) Market or its Customs Union. Moreover, in a new paper released this week, the Scottish Government has channelled George Osborne’s Project Fear by producing doom-laden economic forecasts if the UK were either to leave with a deal or a no deal Brexit. It seems that Scotland’s First Minister, Nicola Sturgeon, is positioning her party to use leaving the EU as a springboard to press for a second referendum on Scottish Independence from the UK.

However, what the SNP should realise is that Scotland’s economic fortunes can be enhanced with the UK outside the EU, that there are opportunities for Scotland with either a deal or no deal with the EU, and that a Scottish exit from the UK would harm both sides economically – in the short and medium term.

The reasons for an economic and political disaster if Scottish independence were achieved go right back to the independence referendum of 2014. Unlike the UK’s position in the EU, Scotland shares the same monetary and broadly the same fiscal policies as the rest of the UK. As raised during the Scottish referendum, leaving the UK would more than likely require a new currency for Scotland and the country assuming its proportion of the UK’s public debt burden.

From the UK’s perspective, if Scotland were to leave either at a time of Brexit or just afterwards, then the added economic uncertainty in what would happen with the negotiations, not just with the EU but also with Scotland, would lead to political instability, which wouldn’t help either side going forward.

Leaving the UK either just before or just after Brexit would also cause a mountain of questions regarding Scotland’s relationship not just with London but with Brussels as well. Will it remain in or look to re-enter the EU? If Article 49 of the Lisbon Treaty and the Copenhagen criteria were still to apply, would the people of Scotland be prepared to assume the euro as its currency and adopt Schengen – along with everything else? Under this scenario, whether or not a newly independent Scottish state would be at the “back of the queue” to join the EU would be the least of the Scottish people’s worries.

However, it goes much more broadly than just Holyrood’s relationship with London or Brussels. What about its relationship with the rest of the world? Leaving the UK post-Brexit would mean Scotland would not be part of the trade deals the UK will be signing with countries across the world. With the Trade Bill that was recently debated in the Commons, Liam Fox and his department have shown that they have done some excellent work in helping the UK to make the most of its post-Brexit, free-trading opportunities. Would Scots really like to turn their backs on increasingly favourable trade deals with close and emerging trading partners?

Of course, to the SNP’s mind, nothing seemingly would quench their thirst more than independence for Scotland from the UK. However, it is dangerous to look at independence as a teleios: a destination. By doing so, it would blind people from the opportunities of the here and now, and this blindness is unfortunately befalling the SNP.

The concentration on Scottish Independence from the SNP’s perspective is diverting attention away from the opportunities that Scotland could have if the party embraced a pro-Brexit position and looked to enhance the opportunities for the fishing industry, the farming sector and the services sector – not to mention manufacturing – that can all become more competitive in a wider globalised world post-Brexit.

This is, of course, what the SNP used to have sympathy with. Former SNP Leader, Jim Sillars, along with many in the party, used to back Brexit as a means of returning powers from Brussels to Scotland. These powers would give the executive in Holyrood unprecedented power to reshape Scottish industries like fishing and farming, without economic shock, and is something that plenty have been calling for ever since the Brexit vote.

It seems, however, that the SNP still stands directly opposed to the whole endeavour of leaving the EU. This is illustrated by the staunch stand by both their MPs and their MSPs against the UK Government’s plans as detailed in the European Union (Withdrawal) Bill.

Having lost a series of votes at Westminster, SNP MSPs on the Finance and Constitution Committee at Holyrood recently signalled that they would exert their influence to oppose signing off on the Withdrawal Bill if it is passed in Westminster in its current form. This seems to be an attempt to have the Bill changed in the Lords (ironic as the SNP wish to scrap the Lords) before the final version is fully considered in Edinburgh. However, if the SNP focused on making the best of Brexit opportunities, instead of opposing the bill and potentially creating a constitutional crisis, they could prepare Scotland for a great Brexit future.

The claim in this week’s new report that retaining membership of the European Economic Area (EEA) is the ‘least worst option’ is not grasping the reality of the situation. The UK Government, the Labour Party and the European Union have all ruled this out. Yet, Nicola Sturgeon and the SNP still seem to believe that the UK can be a sort of ‘Norway-in-sea’ – outside the EU’s Customs Union but taking part in the Single Market. In this, they don’t just forget the political situation but also the differences between Norway and the UK. Further, they forget the economic position whereby the UK would be compelled, if it remained in the EEA, to take the burden of EU regulation but with no way to shape it. This would certainly be a problem for financial services in Edinburgh, Glasgow and beyond – and would mean that businesses finding it increasingly difficult to remain competitive within the global economy as they would be tied to the EU’s project of deeper economic and political integration.

There is an alternative road, however.

The SNP could become the lynch-pin in ensuring Brexit’s success for the Scottish and wider UK economy in both the short and the long term by pursuing a new cooperative approach that helps ensure regulations made in Brussels and Strasbourg are repealed and replaced (if necessary) with new laws that are structured to suit both the Scottish and broader UK economy; by lobbying the UK Government to get control of Scottish fisheries and farming within the transition period; and by working with other parties in the Scottish Parliament to make the most competitive framework for business in Scotland,

This, along with working constructively with the UK Government on trade deals to better the UK’s trading terms worldwide, could ensure huge benefits to the Scottish economy. However, Scotland could also benefit from a no-deal scenario where the UK adopts unilateral free trade. This idea has been put forward by Professor Patrick Minford and has recently been championed by the Institute of Economic Affairs. With higher levels of competition, productivity and foreign direct investment which would result in this scenario, it is hard to reject this out of hand. Of course, the Scottish Government’s new economic analysis – tied to the Osborne way of politicising economic forecasts – does dismiss it; however, if they did look at the analysis of Minford’s work, along with that of Economists for Free Trade, they should be able to see that the road ahead in this scenario is paved with gold.

Regardless of whether the SNP ever wake up to the potential benefits of a no deal, as they currently dominate the Parliament in Holyrood and have 35 out of the 59 Scottish parliamentary seats in the House of Commons, they could help secure economic success for Scotland with a good deal. The SNP should thus work with the UK Government in London and with all parties in Edinburgh to constructively use its influence both now and in the future within the new Brexit bills that will come before the UK Parliament to reshape the UK economy for a better post-Brexit future.