Can Scotland put a price on independence?

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Today a referendum will take place in Scotland addressing 4.3 million electors whether Scotland should be an independent country. Should the yes votes get the simple majority (50% of the votes) the United Kingdom, which has not suffered invasion, revolution or civil war for more than 250 years, might be reshaped. It seems quite conceivable that the United Kingdom in its current form may cease to exist after the referendum.

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There were two earlier occasions when the Scottish voted in the same question, in 1979 and in 1997, in both cases the yes-voters were in majority. In the referendum of 1979 52% of the voters supported the devolution, but only 32.9% of the electors had joined the majority instead of the eligible 40%, thus the referendum ended up inefficient. Again, in 1997 Scottish electors were dedicated to answer whether Scotland should have its own Parliament as well as tax-varying powers. Huge majority supported both questions, thus the UK Parliament signed the Scotland Act, in the following year the Scottish Parliament and the Scottish Executive were founded. This week Scottish electors are addressed to decide an extremely “simple” question, the independence of the country. The possible yes-majority may lead to various consequences for Scotland, for the United Kingdom, as well as for the European Union on financial, economic, political and symbolic levels. Polls show conflicting results and there are black spots of the results due to the different methods or the fact that in this case younger voters are involved in the voting who never voted before.  Looking back to History The Kingdoms of Scotland and England united to form the Kingdom of Great Britain in 1707. Great Britain also implied the Kingdom of Ireland in 1801, though most of Ireland left the Union in 1922, later forming the Republic of Ireland; thus the official full name of the sovereign state today is the United Kingdom of Great Britain and Northern Ireland. The United Kingdom became the member state of the European Union in 1973 but basically the country developed a Euro-sceptic attitude in the course of time. Due, not least to the global financial crisis, national right-wing parties began to rise all around Europe. In Scotland the Scottish National Party (SNP) won the parliamentary elections with 45.4% of the votes and reached an overall majority in the Scottish Parliament with 69 seats in 2011. SNP supports and campaigns for the Scottish independence.

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Polls Polls show conflicting results on how the referendum would result. On the one hand, Sunday Times posted a slight majority of “no” voters with 50.6% not supporting the independence while 49.4% supporting it.  On the other hand Sunday Telegraph anticipated a 58% voters who support independence, with 8% undecided voters. Meanwhile, an Opinium/Observer poll showed a narrow gap in favour of nos. Excluding undecided voters, the poll found 52% of those questioned plan to say “no” while 48% intend to say ‚yes‘. YouGov, one of Britain’s most respectable polling organizations, published a survey showing the unionist lead narrowing to just 53-47 %. Polls are usually made on 1000 person-samples, which may not be eligible, some experts say. Also, we do not know how teenagers would vote: electors‘ age at parliamentary elections must be at least 18, but for the referendum 16 is the age limit. These young people have never voted before, so we are not aware of their preferences. We do not know either how many electors are going to vote. At the latest parliamentary elections 50% voted, but this can be as high as 80% at the referendum. Still we do not have reliable information about the proportion of undecided voters, polls show a wide range between 4-28% of “do not know” answers. As the date of the referendum was getting closer, the campaign became more and more robust. The televised debate was clearly won by the first minister Alex Salmond who is the leader of independence-supporter SNP. Basically, the assumption that the Scots would mainly consider economic issues and favour risk-averse voting for the status quo, turned to be wrong. It appears that many voters are focusing mostly on the political implications of independence. Many Scots see the referendum as an opportunity for creating a more sensitive social democracy, expressing a collectivist national spirit that has been suppressed by English conservatism. One of its sign can be the fact that Scotland elected only a single Conservative Member of Parliament in the last UK election. The strength of the anti-independence campaign might not be appropriately reflected either. Many Scots feel pressured to keep a secret that they will vote “no” because of the perceived popular “coolness” of the independence drive so they do not tell their voting intentions to pollsters. There is also an issue about different methodologies. Some pollsters do their polling over the phone, some over the Internet, some on the doorstep, making it uneasy to compare their results. Possible consequences of devolution Possible consequences of the majority of yes-voters on independence are comprehensive. Economic and financial results may affect the currency, the bank system, the public debt of the country, the number of jobs, or oil reserves; politically it may question the EU-membership of the country, borders and immigration, Shengen-membership; and also have symbolic consequences for other countries, like the urge to change to Union Jack – as well as it may serve as precedent for other parts of Europe, Catalonia in Spain, territorial debates of Ukraine and Russia and can affect the political campaign about the UK membership of the EU. First of all the British prime minister, David Cameron made it clear that in case of devolution the independent Scotland would not be allowed to use the British currency as its own. Ministry of Finance of the UK confirmed this in a notice pointing out that the successful currency union requires a deep political and economic union as well. This may lead to jumps in the expected currency volatility for Scotland, and big falls in the shares of Royal Bank of Scotland (RBS). Britain will not be there for Scotland to bail out its banks anytime in the future. Scotland would owe Britain as much as £100-130 billion, roughly 10% of total UK public debt. Scotland has twice the amount of commerce with the UK, than the rest of the world, which also might be affected. The UK is the largest oil producer in the EU, and about 90% comes from areas that are likely to be claimed by an independent Scotland. The UK is also likely to want a share of current production and reserves, but most analysts expect an agreement could be reached on dividing the assets. There are deeper divisions, however, over how much the remaining oil is worth – a calculation of much greater significance to the future of the Scottish economy. Independence campaigners estimate Scotland's remaining oil is worth about £1.5 trillion. The UK government says it is less than one-tenth of that figure.  The financial sector employs 100,000 people in Scotland and generates roughly £7 billion for the economy each year, so this raises concerns about future job losses and lower tax revenues for an independent nation. Independence campaigners want Scotland to remain in the EU. But an independent Scotland would most likely be treated as a new state, and therefore have to apply for membership. That process can take years and all 28 members would have to approve the application. Borders and immigration may be affected as well, in case the independent Scotland is not the member state of the EU, it either can be within the Shengen-area, leading to disturbing border checks. Polls show that as many as half of the Scottish voters agree that Scotland would regret the devolution within five years. Ironic situation of Great Britain Ironically, governing political leaders of Great Britain oppose the Scottish devolution, while British prime minister David Cameron is planning to set a referendum in 2017 whether the UK should stay within the EU. There is a general election in Great Britain in 2015, thus the results of the Scottish referendum may influence the position of David Cameron. Moreover the British prime minister says now almost the exact same reasons in favour of the status-quo for Scotland that he may be confute in the next few months while campaigning that Britons vote against the EU-membership. In case of the majority of yes-voters the independence negotiations with Great Britain will end in 2016 or 2017, which is close to the date of the referendum on the UK withdrawal. Also, if Labour party has the majority in the next British parliament, their victory may be shattered when Scottish MPs leave the institution. If the Tories win next year’s election, they are going to have a larger majority when Scottish members of the Parliament will be expelled. Also, David Cameron may have to face the previous rhetoric of his own at the referendum on the EU-membership. Without the pro-European Scottish voters, UK electors almost certainly will support leaving the European Union.

by Petra Pintér

PetraPinter

The author is currently finalizing MSc studies in Financial Management at IBS-Buckingham University, and simultaneously doing her PhD studies in Political Science at the Budapest Corvinus University.