Scotland's Quest for Independence: A Bleak Future for England?

The Potential for an Unhappy Divorce

Now that Scotland is seeking independence, the future looks bleak for both nations. However, while the word 'bleak' is indeed controversial, it's worth examining how both Scotland and England might be impacted by this potential political upheaval.

Many predict that the process of Scottish independence would be akin to a messy divorce, bringing with it its own set of complications and disputes. This mirrors the tumultuous period experienced by the main characters in the black comedy film 'The War of the Roses,' where both parties spiral downward as the separation process progresses. Divorce, no matter the circumstances, is never easy, and the same can be said for the potential separation of Scotland from the rest of the United Kingdom.

Is Brexit a Precedent?

Why do I think that Brexit wasn't planned and seemed to be led/driven by a minority of EU haters with only one aim in mind: divorce and a bit of personal revenge? To paraphrase former UKIP leader Nigel Farage and current UK Prime Minister Boris Johnson, the promises of a brighter future were vague and never meant to be fulfilled. Does this sound familiar today? The process and aftermath have shown that the transition was slow, complex, and came at a significant cost.

Will Scotland's independence follow a similar path? The new Indy leadership seems just as unprepared and unable to navigate the transitional pain as Farage and Johnson were during the Brexit negotiations. The promises surrounding independence are equally vague and unrealistic. "We will be the powerhouse of Europe," or "We will be one of the richest countries in the world," are statements that lack any substantial backing. In reality, the process could take significantly longer and be more challenging.

Financial Impacts on Scotland and England

One of the most significant challenges Scotland might face is its financial independence. If Scotland became independent, it would likely have to find new ways to generate tax revenue and manage its economy. According to some estimates, the GDP of Scotland is projected to be 10-30% lower in the event of independence, with tax revenues potentially falling by 2-4%.

The current Scottish independence leadership has attempted to lay out a grand plan, including commitments to create ￡365k new jobs by 2050 and make Scotland the powerhouse of Europe. However, the financial experts suggest that these claims sound more like marketing buzz than sound financial planning. The current estimated cost for transitioning to independence is around ￡200 million, but that figure is quickly rising. As of November 2023, the estimate is up to ￡715 million to complete the project.

Moreover, Scotland's current financial situation is not as favorable as it might seem. The devolution of the 100 agencies such as DWP, HMRC, and others has led to a significant movement of jobs, impacting English staff who currently support these agencies. The expected completion of the Benefits programme was pushed back to 2026, and the latest reports indicate that the project will require an estimated ￡7 billion to complete by 2027/2028. This task seems almost insurmountable without a significant shift in priorities.

Impacts on Trade and Employment

The divorce between Scotland and England might also result in significant changes to trade relations. If Scotland leaves the United Kingdom, it may have to negotiate new trade agreements with both the EU and non-EU countries. This could lead to increased tariffs, affecting both countries. For instance, if Scottish trade with the EU is 3-4 times that of trade with the UK, the economic impact could be as much as ￡10 billion annually.

Additionally, businesses may choose to prioritize 'UK first' patriotism over Scottish goods, leading to a shift in supply chains. UK suppliers could replace Scottish ones, and vice versa, driving up costs for transportation and potentially causing inflation. The situation enhances the risk of higher taxes and service cuts in Scotland, as the new country may not have the same financial resources as the UK.

Another concerning issue is the management of the UK's Trident nuclear submarine program. If Scotland successfully secures independence, the program might need to be moved, leading to further political complexities and financial challenges.

Financial Independence and Sterling

Financial independence might also mean that Scotland might need to adopt a new currency, or at the very least, a new method of managing sterling. The UK has suggested that Scotland might use sterling for a few years, but this is a risky proposition. Historical examples, such as Ireland's experience with using sterling for 50 years before transitioning to the euro, highlight the potential pitfalls of this approach.

Given the volatile nature of financial markets, any attempt by Scotland to use sterling would likely be met with skepticism and uncertainty. The lack of clear financial plans and support from the business community means that Scotland might struggle to manage its economy effectively. The consequences of such instability could be severe, leading to currency devaluation, higher inflation, and reduced economic growth. As we saw with the Recession of 2022, fiscal and monetary policies need to be well-planned and transparent to avoid market panic and economic turmoil.

In conclusion, the path to Scottish independence, much like Brexit, appears to be fraught with challenges and uncertainties. Without a clear and realistic strategy, the future for both Scotland and England looks bleak. As the world watches, the question remains: is this the beginning of a new epoch, or just another political miscalculation with significant repercussions?