LONDON (Reuters Breakingviews) - Scots have presented pro-European Brits with a light at the end of the Brexit tunnel - but it may yet be an oncoming train. Scotland’s First Minister Nicola Sturgeon on Monday formally called for a referendum on independence, two and a half years after Scots voted narrowly to stay in the United Kingdom. The small bump in the value of sterling against the dollar that followed her comments is premature.
The optimists’ interpretation of Sturgeon’s move is as follows. Scots, who voted in large numbers to stay in the European Union last June, could see a second referendum as a chance to achieve that aim by divorcing the United Kingdom. The threat of breaking up the union might be enough to persuade UK Prime Minister Theresa May to strike a more conciliatory tone with European negotiators, reducing the risk that Britain crashes out of the EU in a “hard Brexit”.
This scenario requires Scots to hold their vote late enough to make a decisive impact on the negotiations, and to decide once again they are better off in the United Kingdom. That would be the rational decision. Even more than in 2014, the economic case for secession looks flaky – Scotland’s budget deficit factoring in capital spending was 9.5 percent in the 2015-16 financial year, even after including North Sea oil revenues, Scottish government figures show. Fundamental questions – what the Scottish currency and central bank would be, how the banks would be regulated – remain just as unresolved.
It’s easy to take the pessimistic view, though. Even if Scotland gets a second vote – the UK parliament in Westminster makes the decision – it might not happen until after Britain has completed negotiations with the EU. Besides, May has already signalled that the UK will no longer be part of Europe’s single market or allow freedom of movement. Making concessions on these issues for Scotland’s benefit would represent a politically dangerous U-turn.
After a host of political upsets in 2016, making assumptions about voting intentions is misguided. It’s quite possible that a grumpy Scottish electorate ignores tangible issues like English-Scottish trade links and focuses solely on the fact that Brexit represents London telling Edinburgh what to do. In that case the result could be hard Brexit, followed by hard Scoxit.
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.