What impact would Scottish ‘Yes’ vote have on the UK
So far the debate about September’s referendum on Scottish Independence has focused almost entirely on the impact of the vote in Scotland. Yet what would an independent Scotland mean for the rest of the UK?
As a recent BBC document ‘Scotland Votes: What’s at Stake for the UK’ explored, from voting in next year’s General Election to economic policy and monetary union, Votes at 16 to the future of the Trident nuclear defence deterrent, reverberations from September’s vote could be felt across the land.
Counting the economic costs
Professor Chris Martin, Department of Economics said: “Although hard facts are scarce in the partisan debate on the economic effects of independence, the costs seem high and the benefits too dependent on a high price for oil. Some argue that independence will lead to a dynamic knowledge driven economy. But although Scotland has a strong science base and has the heritage of the enlightenment, the ‘Scottish tiger’ scenario seems reliant on wishful thinking.
“Recent evidence on the dominance of non-Scottish companies (accounting for 70 per cent of Scottish GDP and for 83 per cent of larger firms) reinforces the economic argument against independence. It suggests that the Scottish tax base may be quite weak. This may result in a higher premium on Scottish sovereign debt. So on narrow economic grounds, I would give a strong “no”.
“But the desire for independence seems to be driven by romantic views of a separate Scottish identity and culture rather than by cold economic logic. If Scotland were to become an independent country, I do not think the UK government’s position of ruling out a monetary union is in the economic interests of the continuing UK.
“Economic theory suggests that a currency union benefits both parties so long as labour and capital markets are highly integrated, business cycles are synchronised and there is a mechanism to equalise wealth across areas suffering different short-term economic conditions. The residual UK and an independent Scotland seems as close as anyone to satisfying the first three conditions. No currency union between states has ever satisfied the fourth.
“At a less abstract level, Scotland would be a significant export market for the UK rump, similar in size to Belgium. Imposing a separate currency would damage this.
“This conclusion is contingent on it being clear that the UK rump is not responsible for the debts of an independent Scotland and on a credible mechanism for the exit of Scotland from the currency union. A Scottish exit would be unfortunate but probably not critical for the rest of the UK.”
Managing monetary union
Dr Bruce Morley, Department of Economics said “The problem that Scotland faces with sharing a currency with the rest of the UK is the same as the current problems in the Eurozone. If Scotland becomes independent it would have its own fiscal policy, in terms of government spending and taxes.
“At the moment, Scotland and the rest of the UK have a common fiscal policy to a large extent, so if there is a problem with the Scottish economy for example, the rest of the UK can come to its aid with fiscal transfers to it. In the event of a much looser fiscal union, this would be more difficult. Scotland would have to issue its own debt to fund increased government spending. As this debt increases it would adversely affect all the other members of the shared currency, i.e. the rest of the UK. In the event of Scotland defaulting on its debt, this would have serious implications for the currency and its other members, so, as in the Eurozone with Germany is bailing out Greece, the rest of the UK would be forced to bail them out.
“However if Scotland is forced to leave the pound it would lose the Bank of England acting as the lender of last resort. This ensured the Scottish banks didn’t collapse during the financial crisis as the Bank of England provided them with large amounts of liquidity. So it is potentially problematic if they stay in the pound and if they leave, this would mean that trying to join the Euro would be the other main option.”
Trident, defence and security
Dr Simon Smith, Department of Politics, Languages & International Studies said: “The Naval Base Clyde is home to the four Vanguard-class Trident equipped submarines, at Faslane, as well as the storage depot for the nuclear warheads, at Coulport. Although all four submarines are based on Scottish territory, one submarine is also on patrol at any one time – referred to as the UK’s Continuous at Sea Deterrence or CASD. Furthermore, the entire Royal Navy nuclear powered submarine fleet is due to be stationed at Faslane by 2017 and the current Vanguard-class submarines are due for replacement starting in 2028 at an estimated total cost of £20 billion.
“In 2013, the SNP passed a resolution in favour of a constitutional ban on nuclear weapons in an independent Scotland. The desire to rid Scotland of Trident is thus a principled position for the SNP and, according Nicola Sturgeon, one that is ‘not negotiable’. Of course, the position of the UK government is the exact opposite. Therefore, the issue of Trident directly affects the debate over Scottish independence.
“Scottish independence would not only have significant implications for the UK’s current ability to operate CASD. The relocation of Trident is not a simple matter and should a sovereign Scotland insist on a swift removal there might be no alternative but to decommission.
“The most likely replacements – in a rump UK – for Faslane would be Barrow (Cumbria), Milford Haven (Pembrokeshire) or Devonport (Devon). However, all of them bring safety, logistical and, therefore, political drawbacks – and replacing Coulport, even more so. Some have suggested that it could take a ‘minimum’ of twenty years to construct replacement facilities. Other options have been proposed including ‘sharing facilities’ either in the United States or France. However, the UK Government is on record as saying that ‘operations from any base in the US or France would greatly compromise the independence of the deterrent and there would be significant political and legal obstacles’.”
Referendum impact on General Election
Dr David Moon, Department of Politics, Languages & International Studies, said: “The major focus at present is understandably on what the result of the forthcoming referendum on independence itself will be. That outcome, however, will also have a huge impact on next year’s General Election, defining, as it will, the very terms of engagement for all parties. While it is often noted that Labour and Liberals will be hit disproportionately hard by the loss of their seats at Westminster in Scotland, in the event of a ‘Yes’ vote, the 2015 general election would most likely see a resultant swing to the right even before these seats disappear.
“This is because the election would be transformed, in England specifically, from a campaign focused on living standards and coalition failures, into a campaign on the question ‘who do you want to negotiate the independence deal with the Scots?’ That would be good news for the Conservatives and UKIP. Portraying Labour and Liberals as ’soft touches’ when it comes to Scotland, both parties would be better positioned to draw upon the wellspring of nationalist resentment among a spurned and rejected public in England which may develop, to win support for a program based around austerity, not only in public spending in the UK, but in what is offered to a departing Scotland as well. For those within England, Wales and Northern Ireland, who are already looking forward to or fearing the promise of a post-election referendum on leaving the EU, there are additional reasons to pay attention to the referendum on Scotland leaving the UK.”
Extending the vote at 16
Ben Bowman, Department of Politics, Languages & International Studies, said: “The Vote at 16 in Scotland could hardly have come at a better time for supporters of electoral reform. A backbench motion in 2013 supporting votes at 16 passed by a majority of 119 to 46, and every party in Westminster except the Conservatives, now back extending the vote. Labour target the 2016 London Mayoral election for the first votes at 16 in England, and the 2020 General Election as an opportunity to extend suffrage across the UK. The Vote at 16 is here to stay.
“Commentators in the rest of the UK will be watching to see to what extent young people vote in Scotland, or whether a large proportion continues to abstain from voting. We will also be following those who do vote, and their choice relative to other age groups. Proponents of equal votes at 16 will hope Scottish teenagers are comparable to 16 and 17-year-olds who vote elsewhere in Europe – in Austria and Slovenia, and in some elections in Germany and Norway – where turnout and voting intentions are broadly similar to older generations. Should the same happen in Scotland, supporters will argue it shows young voters are equally well informed and motivated as voters at any other age, and deserve equal voting rights.
“Low young turnout is an incipient crisis in UK democracy, and the Vote at 16 will be closely monitored for a positive effect on young abstention. In 2010, though male electoral turnout among 18-24s ran at a relatively healthy 50 per cent, only 39 per cent of young women voted. Re-engagement with young women could be an important indicator of whether votes at 16 are able to convince young citizens that their voices and democratic oversight are valued.”
http://www.bath.ac.uk/research/news/2014/08/12/scottish-yes-vote/
