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British politics is always rough, but it’s now even more cantankerous than ever. And the bad vibes will likely have a poor economic outcome.

That’s especially so when it comes to relations between Holyrood, the seat of Scotlands government, and Westminster, where the UK’s Conservative Party-led rule.

Unfortunately, the lack of dialogue between the two will likely hurt the former’s economy more than the latter.

Here’s what’s happened. Scotland’s first minister Nicola Sturgeon has yet again repeated her desire to hold another referendum on Scotland’s independence from the UK. It been part of that union since 1707, and in 2014 a similar poll of Scotland’s residents resoundingly said no to a potential split between the two countries.

However, this time Sturgeon is claiming that Scotland is ready for independence which will make the country more “wealthier, more productive, fairer and happier than Scotland is under Westminster.”

She continues:

  • “We must never forget that we already have many of the key institutions that an independent country needs, and coupled with our strong economic foundations and immense potential, probably no country in history has been better-prepared to become independent than Scotland will be.”

However, there are some challenges she, and the rest of her party faces.

Referendum in Question

Britain’s highest court needs to decide whether Sturgeon has the authority to hold another referendum. The last one, eight years ago, was allowed on the basis that it was to be a once in a generation event.

Central Bank Desires

Despite what Sturgeon says, there are some institutions still lacking that could take some time to establish. Notably, the country has no central bank, and if it wants to have its own independent currency, which Sturgeon says it does, it will need one.

That’s easier said than done. There are many central banks in the world, yet few have any credibility. Those that do are few and far between and have either economic might or a long history (or both) behind them. The Bank of England is one, so are the Federal Reserve, the European Central Bank, the Swedish Riks Bank, the Bank of Japan and Bank of Canada.

Currency Envy

Starting a central bank will be hard, as will establishing new currency. The most useful comparison is with the Republic of Ireland. It split with the UK in 1922. For the overwhelming majority of that period Ireland has pegged its currency either to the British pound or more recently it adopted the euro. The punt, as the currency was named, did not float independently for very long at all. Scotland would likely find it easier to stick with the British pound or to adopt the euro. Neither would give Sturgeon the ego boost of Scotland having its own currency, but it would be more practical.

Capital Flight Risk

Sturgeon recently said she ‘detests’ Conservatives. These are the members and or voters of Britain’s Conservative Party. That’s a strong word and worth revisiting the dictionary for clarity. According to the Cambridge dictionary it means the following:


“To hate someone or something very much”

That’s unfortunate given elected leaders are under a moral duty to represent all their constituents. In the case of the 2021 Scottish parliamentary election 44% of the population voted for the SNP (Scottish National Party) while 23% voted for the Conservatives. The remaining votes were largely for left or centrist leaning parties.

Hate would seem to have no place in a civilized democracy, and yet here we are. Scotland’s leader has sent the clear message that she hates a significant group of the population.

That will do her no good economically. The well-heeled and financially successful tend to vote Conservative far more than do those with more modest means. Yet, what a newly independent country will need more than anything is the help of the well-heeled, the highly skilled and financially successful.

It will be the risk takers and entrepreneurs who can help build up Scotland. And as mentioned, those will be disproportionately Conservative voters or supporters.

Worse still, those people are almost certainly more geographically mobile than the rest of the population. It’s highly likely that many of the very people an independent Scotland will need will flee to where they are not hated, perhaps to where they might even be welcome. I already know of more than a few people who are taking such steps top leave Scotland, taking their businesses, their capital and their brains with them.

EU Dreams

Sturgeon also plans for an independent Scotland to apply for European Union membership. That in itself is not going to be easy.

First, there are a few European countries that are battling their own breakaway provinces. These include Catalonia and the Basque country in Spain, the Alsatian region and Basque regions in France. There are a whole lot more as well across the continent.

For the EU to admit Scotland every member state has to agree. In other words, one no-vote would nix Scotland’s entry. And with all those break away movements its hard to see that happening. How could Madrid for instance, say to Catalonia that it couldn’t be separate and yet at the same time embrace the breakaway Scottish movement. Politically, that would be hard from one end of Europe to the other.

What Sturgeon would seem to be betting on here is the EU hates Britain (because of Brexit) so much that it will overcome any intra-country politics. I’d say that inviting Scotland into the EU would likely exacerbate any domestic problems for Europe’s member states.

More Obstacles

There are more challenges for Sturgeon’s goals. At least a couple of them seem to be at odds with current stated desires.

First is something I wrote about recently: Scotland’s policy for higher education works in direct opposition to its desire to reduce income inequality. In short, the children of the well-heeled are disproportionate beneficiaries of free college for Scottish residents. You can read more on that here. England doesn’t follow such a policy. This is all down to the Scottish government.

Second, is the SNP’s desire to go green, meaning eliminating fossil fuels. But at the same time Scottish government analyses repeatedly point to oil revenue as a key part of Scotland’s wealth. If the ruling SNP has no desire to use oil or natural gas, then why include the value of the resource? It sounds like the Scottish government shows no coherence on this matter.

What actually ends up happening is hard to predict. But these challenges likely won’t ll disappear just because the independence movement wants them to do so.


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