Can Europe Make It?

Scotland and Brexit – what should Scotland do next?

Scottish First Minister, Nicola Sturgeon, has barely put a foot wrong in the days since the UK voted for Brexit. What should she do next?

Kirsty Hughes
7 July 2016

Scotland's First Minister Nicola Sturgeon speaks during a media conference in Brussels. PAimages/Geoffroy Van der Hasselt. All rights reserved.Scottish First Minister, Nicola Sturgeon, has barely put a foot wrong in the days since the UK voted for Brexit.

From meetings in Brussels with the presidents of the European Commission and European Parliament – Jean-Claude Juncker and Martin Schulz – to the establishment of a committee of experts to advise the Scottish government and parliament on options to protect Scotland’s interests in the face of Brexit, to meetings with the Scottish diplomatic and business communities.

The committee of experts has yet to pronounce on options which could range from Scotland mirroring EU laws in devolved areas, to staying in as much of the single market as possible, to full independence as a state and as an EU member state.

But what is already starting to become clear is that it is in Scotland’s interests to stay in the single market – with its four freedoms, of good, services, people and capital – as apparently discussed at Nicola Sturgeon’s meeting with businesses leaders this Tuesday (5 July).

What remains unclear is what the Conservative government’s negotiating stance will be and when it will trigger Article 50 of the Lisbon Treaty to begin talks with the EU. Theresa May as the likeliest next prime minister has already said – like the other candidates – that the UK could not continue to accept full free movement of people.

But, beyond that, as the economy heads towards recession and perhaps renewed financial crisis, the UK options for Brexit remain foggy. The EU has repeatedly made it clear – both in statements on Brexit already and in its current stand-off with Switzerland – that full access to the single market requires that free movement to be accepted, so what sort of lesser access the UK might get is quite unclear.

What should Scotland do next?

Delay of at least some months looks to be in the UK’s interests in terms of establishing a negotiating stance for talks with the EU. Yet the longer the UK delays, the more economic problems will accumulate, perhaps critically. So delay is a two-edged sword.

For Scotland, delay looks mostly unhelpful. There are clearly limits for now to what can be done to protect Scotland’s economy and public services from the UK-wide economic impacts of Brexit. If Scotland does end up staying in the EU’s single market, whether from within the UK or as an independent EU member state, this will protect it sharply from negative economic impacts across the UK. But only as and when that becomes definite and not just an aspiration.

For now, Scotland can only state that staying in the single market is its intention. It cannot yet cut through the deep political and economic uncertainty Brexit is creating, and protect Scotland’s economy from the Brexit shockwaves.

So could Scotland stay in the single market, and in the UK, if the rest of the UK (rUK) aims at a lesser engagement with the single market in return for less free movement of people from the EU? That would require immigration policy to be devolved to Scotland, so that EU citizens in Scotland would have the right to live and work there, while in rUK EU citizens would have new restrictions on those rights, but still be able to visit rUK without visas (one assumes).

Would England at that point establish border controls between Scotland and England to check EU citizens coming into the country? If those citizens anyway had the right to travel to and visit rUK, it’s not  immediately obvious that this would be necessary. But if England wants to discourage EU citizens working illegally in rUK it may think border controls are needed.

Border controls may be needed too for customs purposes – this will depend on how much of the single market rUK retains access to. If rUK has full access for goods but not for services, this may make it easier to keep borders open – with Ireland as well as Scotland. But this is far from guaranteed.

How fast should Scotland move?

Scotland has an incentive to move quickly if possible. The sooner the UK has its desired negotiating stance ready – which will cover much more than the single market, including foreign policy, justice and police cooperation and more – the sooner Scotland will be able to judge if it is realistic to stay inside the single market and inside the UK.

Once Article 50 has been triggered and talks with the EU begun, Scotland will also probably find EU politicians and officials much more ready to engage – at least behind closed doors – on whether they see it as feasible for Scotland to be fully in the single market when rUK is not. It will after all require EU and Westminster agreement for this to happen.

If it starts to become apparent that Scotland cannot retain much more access to the single market than rUK, then Scotland will need to decide if it is going to hold a second independence referendum with the aim of staying in the EU – or at least in the European Economic Area like Norway.

While many commentators have suggested that those in favour of independence still have to deepen and develop their case for independence in terms of the economy, public finances and currency, this could surely be done in a few months rather than in a year or more. This economic case will be challenging to build but cutting Scotland off from much of the economic turmoil and uncertainty currently affecting the UK will certainly help that case.

A rapid independence referendum would then have two big advantages. Firstly that Scotland would, if it voted yes, become independent before the UK left the EU, making it easier to stay in in the EU, rather than leave and re-join.

And secondly, the sooner it became clear Scotland was staying in the EU and in the single market, the sooner Scotland would not only be relatively insulated from rUK economic problems but also it would like Ireland, France, Germany and others, be in a position to attract business and investment that would otherwise have gone to the UK.

The case for moving fast has to be considered in the context of political and public opinion in Scotland. For now, Labour and Lib Dems – as well as the SNP and Greens – have agreed the aim should be to keep Scotland in the EU or at least the single market, and to explore how to do that. But Labour and Lib Dems have not changed their opposition to Scottish independence.

So, having set out on this route, and established a committee of experts, Sturgeon needs to let them do their work. But the options for Scotland do not need a yearlong commission – surely initial findings of the committee of experts could be set out in early autumn.

If the UK government at that point has still not triggered Article 50, Scotland’s politicians will need to decide how to pursue their case. And by autumn both the deteriorating economics and Scottish public opinion on whether to support an early Indyref2 may also be clearer.

Scotland cannot protect itself yet from the instability of Brexit. But it is the only part of the UK currently on a clear strategic path to stay in the single market and reduce uncertainty and instability as much as it can. How fast Scotland could and should look at the independence option is surely going to be centre stage of the debate in the months ahead.

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