Why does Scotland want to Remain?

Woman with a glass of Scotch © Scotch Whisky Association
Brexit is unlikely to dampen this party

In the wake of the Brexit vote, Scotland’s devolved government has been making a great show of limiting the economic fallout. To listen to the SNP, you’d think that leaving the EU would be even more of a catastrophe for Scotland than for the rest of the country. Jobs will be destroyed and investment will collapse. Within months, the country will be turned into a version of Venezuela. The only way to prevent that would be for Scotland to leave the UK, and remain inside the EU.

The trouble is, when you take a look at the actual numbers, the argument starts to look very shaky. According to figures from the Scottish government, once you exclude oil and gas, then Scotland chalks up exports of £11.6bn to the EU per year. By contrast, its sales to the rest of the world were £15.2bn, while the rest of the UK accounted for a whopping £48bn. Last year, its exports to the EU fell by 16%, the worst result of any of the four countries in the UK. Its largest trade partner is the US, not any country in the EU. Its second-largest partner is the Netherlands – but that will mainly be stuff going to Rotterdam for re-export.

Imagine there was an independent Scotland within the EU. All that stuff sold to the rest of the UK would suddenly be reclassified as non-EU exports, and would potentially face tariffs, certainly currency fluctuations, depending on what kind of trade deal finally emerges from Theresa May’s government. In that situation, only about 18% of Scotland’s exports would go to the EU. That would be by far the lowest of any EU member (the lowest right now is Britain on 44% – one reason we are leaving).

At the level of individual industries, the determination to stay in the EU looks even stranger. Take whisky, for example. The Scotch Whisky Association has already said that under World Trade Organisation rules there will be zero percent tariffs in the EU. Anything else would be illegal under international law. There may be the odd problem. Korea, for example, could impose 20% tariffs on the spirit. But we could probably negotiate that away fairly easily – it is not as if we don’t import a lot of Samsung phones and TVs. And there will also be opportunities. Take India, potentially a huge market for Scotch. Right now it has a 150% tariff, but we may be able to reduce that once we can negotiate our own trade deals.

Nor does freedom of movement of workers make much difference, and certainly far less than it does for the rest of the UK. Scotland only has 7% foreign-born workers, compared with 13% for the country overall. And while it has a significant number of Poles, most of its migrants are from the Commonwealth. Most Scots who work outside their own country are, of course, in London. Very few are in Europe.

There will of course be some impact from leaving the EU. Edinburgh is a major financial centre – the third biggest in Europe – and that could be hit hard by a loss of access to the eurozone. Then again, for Edinburgh’s asset managers and bankers, access to the British market is more important than access to France or Germany. And just like the City, it may find that for every piece of business lost, another will be won once it has escaped EU regulations.

True, the majority of Scots voted to stay in the EU, although hardly overwhelmingly so. There were respectable reasons for doing so, just as there are valid reasons for trying to stay inside now the rest of the UK is heading for the exit. It is legitimate for the SNP to argue for staying in the EU for political reasons. But to pretend that leaving will have any significant impact on the Scottish economy is just nonsensical.

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