Category Archives: ScotRef

The Scottish export conundrum

It’s becoming abundantly clear that the Unionists’ main argument in the next independence referendum will be that if Scotland has to choose between being in the UK’s and the EU’s Internal Markets, the former wins hands down. Here’s for instance David Mundell’s take on it:

Our own domestic market in the UK is far and away the most important market for Scotland’s businesses.

The Scottish Government’s own figures show our trade with the rest of the UK is worth four times our exports to the EU.

Businesses in Scotland sold £37.5bn more in goods and services to their own market in the UK than they did to all 27 EU countries put together.

Today’s figures show the UK is the vital union for Scotland and highlight the importance of maintaining the UK market and preventing any new barriers to doing business across the UK as we leave the EU.

We must therefore find a convincing answer to this question. Wings over Scotland has provided one, but it’s making certain assumptions about the deal Westminster will achieve.

I therefore think it might be useful to examine the various scenarios systematically:

The (r-)UK remains with the EEA and the EU’s Customs Union

This scenario could happen either because Brexit never happens due to a second referendum, or because a new government decides to apply for continued membership of both the EEA and Customs Union (which basically would be membership without voting rights).

Would Scottish independence be good or bad for different types of businesses in this scenario?

  • Exporters to the rUK: Not a huge difference. Some companies might decide to set up a separate Scottish HQ if we are independent, which will increase employment and domestic demand, but that’s about it – the EU will ensure that the rUK doesn’t discriminate against Scottish businesses.
  • Exporters to the EU: Very little difference, but independence will be preferable, because there might still be small bits and pieces that Westminster will not take part in.
  • Exporters to the rest of the World: Very little difference, because participating in the Customs Union means that Westminster can’t make their own trade deals.
  • Other businesses: Very little difference — the main difference will be that independence will lead to a rise in the number of Scottish HQs and government agencies, which is likely to lead to a general rise in economic activity in Scotland.

Verdict: Under this scenario, independence is economically the best option, but the difference isn’t great.

The (r-)UK gets a really good trade with the EU

In this scenario, the (r-)UK does leave the EEA and the Customs Union, but manages to negotiate a really good trade deal. There will be some restrictions on the free movement of people, and there will be customs checks at the borders. The (r-)UK will make separate trade deals with the countries of the world (but because the EU is a much bigger trade block, these deals will typically the worse than the one they replace).

Would Scottish independence be good or bad for different types of businesses in this scenario?

  • Exporters to the rUK: Independence won’t make much of a difference with regard to trade, but the customs checks will make it a bit of a hassle, so some of these companies will relocate to the rUK.
  • Exporters to the EU: Independence is much better because of the lack of customs checks, and because companies can send key personal back and forwards between Scotland and the rest of the EU freely.
  • Exporters to the rest of the World: Independence is preferable, because the EU’s trade deals will be better.
  • Other businesses: My guess is that more companies will move from the rUK to Scotland to remain within the EU than the other way, so it’s likely the overall effect will be positive. It’s really an unknown at this stage, though.

Verdict: Mixed, with independence being better for some companies and worse for others. On average, I think independence will be somewhat better for the Scottish economy.

The (r-)UK gets a limited trade deal

This scenario is of course rather vague – a limited trade deal would necessarily prioritise some products or sectors over others, and there are infinite possibilities. What is certain, however, is that it will be somewhere between the preceding scenario and the following one. This scenario is likely to be accompanied by a recession (but a smaller one than in the next scenario).

Would Scottish independence be good or bad for different types of businesses in this scenario?

  • Exporters to the rUK: If Scotland is independent, some companies will not feel much of a difference, while others will struggle badly, depending on whether they’re included in the trade deal. If Scotland remains within the UK, things won’t change much at first for these companies, but any supply chains depending on EU links could break, and the general recession is likely to affect them.
  • Exporters to the EU: If Scotland is independent, nothing will change (and companies from the rUK will move to Scotland to remain within the EU). Without independence, some sectors will struggle while others are OK, but worse than they would have been.
  • Exporters to the rest of the World: Scottish independence is a lot better, because Scotland then keeps the EU’s great trade deals.
  • Other businesses: Independence is likely to be better, because of the increased economic activity caused by companies and people moving north; furthermore, the rUK recession can hopefully be avoided.

Verdict: Independence is better on average, even though a few companies who focus solely on exporting to the rUK in sectors not covered by the trade deal will struggle.

WTO terms

In this scenario, the (r-)UK leaves the EU without any agreement and has to trade on WTO terms, which means there will be tariffs on lots of exports, and no free movement of people. There will also necessarily be a hard border in Ireland. In this case, there is broad agreement that the economy will take a severe hit, with many companies and people fleeing the country. Things might improve eventually, but the economy will first experience a severe recession for several years.

Would Scottish independence be good or bad for different types of businesses in this scenario?

  • Exporters to the rUK: If Scotland is independent, these businesses will suffer, but people will still want their whisky to forget their worries, and they’ll still need energy produced in Scotland, so the exports won’t collapse. If Scotland remain within the UK, these exporters will still suffer because of the UK recession.
  • Exporters to the EU: Scottish independence is a hundred times better for obvious reasons.
  • Exporters to the rest of the World: Scottish independence is a lot better, because Scotland then keeps the EU’s great trade deals.
  • Other businesses: If Scotland isn’t independent, they’ll suffer because of the recession. If Scotland is independent, it’s likely the rUK recession will be felt north of the border, so things will still be bad, but much better than it would have been without independence.

Verdict: Companies focused on exports to the rUK will struggle after independence, but they’d struggle anyway because of the severe recession. For other companies, independence is much better.


Interestingly, independence seems to be better in all scenarios, but in some of them, the difference is much bigger than in others.

The Unionists going on about the amount of Scottish exports to the rUK compared with the rest of the World seem to be overlooking two big issues: (1) The more the UK cuts itself off from the EU, the more the economy will suffer, and that will hurt also those companies exporting to the rest of the UK; (2) the UK is likely to get trade deals that are much worse than what the EU has already negotiated, and that will be bad for lots of companies if we remain within the UK.

It’s really misleading to look at the size of the exports without looking at what will happen to them in the future, especially if Theresa May manages to shoot the UK in the foot. The more the rUK cuts itself off from the EU, the more we’ll need Scottish independence.

What Indyref1, Brexit and Trump taught us

Cat on Table
Cat on Table.
To some extent, the last independence referendum was one of the first big political events where social media played a bigger role than mainstream media. If it had happened ten years earlier, it’s likely Yes would never have risen above 35% because pro-independence voices would have been suppressed by all TV channels and newspapers. On the other hand, Yes didn’t win, we only managed to do much better than anybody had expected in advance.

Since then, there have been a few cases where the expected side didn’t win, most notably the Brexit referendum and the American presidential election.

The media are what they are, so if we assume that Alex Salmond is right and the next Scottish independence referendum will take place in 2018, we need to learn from those events quickly to figure out how to win.

Firstly, we need to learn that one size doesn’t fit all. In the Brexit referendum, it was immensely useful for the Leave campaign to have two big campaign organisations: The official one – Vote Leave – which concentrated on respectable, intellectual arguments about free trade with the world and making Westminster sovereign again, and the unofficial one – Leave.EU – which focused on immigration. The Leave campaign needed both organisations to attract different groups of voters.

In the same way, in Indyref2 we cannot win over former Yes–Leave voters with a campaign that is concentrating on No–Remain voters, so we need at least two campaigns. It might also be good with a campaign organisation focusing on voters over 55 (older people were key to both Leave’s and Trump’s victories, so they definitely can be reached by an insurgent campaign).

Of course we had many different organisations last time, too, but in my opinion the main difference was in their audience, not in their messages. No–Remain voters will need completely different arguments from Yes–Leave voters. I think it was Stewart Kirkpatrick who suggested at the Scottish Independence Convention earlier this month to give voters a sweetie-shop, a panoply of policy options.

Secondly, having different campaign groups isn’t enough, we also need to ensure they reach the right voters. On social media it won’t be too hard, because people are more likely to follow people and groups they agree with, but untargeted door-chapping is a waste of time. As a Dane, I should be talking to voters from Scandinavia, Germany and the Netherlands, and the English Scots for Yes should be given lists of voters born in England to talk to. As far as I’m concerned, telling each campaign group where their voters are should be one of the main tasks for Yes Scotland II.

Thirdly, we need to think about dead cats. Spin doctors have for a while been good at throwing them on the table:

Let us suppose you are losing an argument. The facts are overwhelmingly against you, and the more people focus on the reality the worse it is for you and your case. Your best bet in these circumstances is to perform a manoeuvre that a great campaigner describes as “throwing a dead cat on the table, mate”.

‘That is because there is one thing that is absolutely certain about throwing a dead cat on the dining room table – and I don’t mean that people will be outraged, alarmed, disgusted. That is true, but irrelevant. The key point, says my Australian friend, is that everyone will shout “Jeez, mate, there’s a dead cat on the table!”; in other words they will be talking about the dead cat, the thing you want them to talk about, and they will not be talking about the issue that has been causing you so much grief.’

Donald Trump effectively perfected the Twitter equivalent, tweeting something on a daily basis that would dominate the headlines, even if most people would be outraged.

I think Trump’s campaigning style was too outrageous for most Scots, but I we need to learn to set the agenda and not end up meekly answering the No side’s silly questions every day.

Finally, we need to talk about fake news. Even if we try to avoid it, other people might decide to “help” us in this way, and we’re likely to face a lot of fake news stories. I’m not entirely sure what we should do in this regard, but we should be prepared for it, for instance by having a few dead cats up our sleeve that we can deploy when we need them.

I’m sure there are many more things we can learn from the last three years, but the next independence referendum might start soon, so we need to get ready.

Retailers and the customs union

Stillorgan Shopping Centre - South Dublin (Ireland)
Stillorgan Shopping Centre – South Dublin (Ireland).
There was an interesting article in The Irish Times today about the consequences for Ireland when the (r-)UK leaves the EU’s customs union:

Even if there were a free-trade agreement, allowing free movement of goods between the UK and the EU, this will not apply to imports from countries outside the EU. Thus border controls will be essential to ensure that imports from third countries, such as China or India, comply with EU regulations.

This will have huge implications for the retail sector, much of which currently operates on a British Isles basis. Goods travel from warehouses in the UK to the Republic without problem. After Brexit, this will require new bureaucracy and customs duties, entailing a major increase in cost.

That could raise prices significantly for Irish consumers, posing serious competitiveness problems for the wider economy. Because of the small size of the Irish retail market, going it alone is a high-cost option.

Although they don’t mention it, this is likely to be a much bigger problem than most people realise because of the way modern businesses depend on just-in-time manufacturing and low stock levels. What this means is that shops tend to get new deliveries all the time instead of having a lot of stock, and this will lead to huge problems if the over-night deliveries sometimes get disrupted by customs checks.

It’s possible some companies will start treating Ireland as part of their French operation rather their British one (for instance, Kellogg’s might prefer to sell the products made for the French market in Ireland instead of the British ones to avoid the customs checks). That would definitely make Ireland feel less British over time.

From a Scottish perspective, it means that if we leave the UK at the same time as Brexit in order to remain in the EU, and if the rUK proceeds with the harmful policy of leaving the EU’s Customs Union, retailers are likely to start treating Scotland and Ireland as one market (which again might been seen as a subdivision of the Scandinavian or the French one), whereas the rUK will be seen as a rather distinct one. It would make the products in Scottish and Irish shops more similar over time, and less similar to the ones found in England and Wales.

It’s worth bearing in mind that the EU’s Customs Union is almost ten times as big as the rUK’s one, so although it will be annoying to lose some of the English and Welsh products in the supermarkets, the consequences for Scotland will be much worse if we leave the EU together with the rUK.

I’d much rather Westminster decided to remain in the EU’s Customs Union, but if they really are hell-bent on leaving it, it’s yet another argument why Scotland should become independent within the EU.

The Scottish Independence Convention

Driving into Scotland after 2014
Driving into Scotland after 2014.
Yesterday I took part in the Scottish Independence Convention in Glasgow. There was a great buzz – it’s clear there are many thousands of activists who are desperate to go out and campaign for independence as soon as they get a chance.

The day was divided into three sessions: Policy, strategy and movement.

The policy session was a bit weak – there were lots of interesting ideas floating around, but a voice inside my head kept shouting that we’re living in an age of fake news and social media, and having wonderful, worked-through policies won’t really matter during a campaign. For instance, I’m a great fan of a citizens’ income, but I’m not convinced that’s the kind of thing that would really matter in a heated campaign (and in a worst-case scenario, it would allow our opponents to portray us as hopeless idealists).

One sentence that stayed with me was Jim Mather’s comment that “Last time was like a tennis game where only Better Together were allowed to serve” (quoted from memory). I think that’s a great summary of the campaign, but is developing a lot of policies really the right way to prevent that from happening again? I’m not so sure. The problem wasn’t that we couldn’t return the ball, but that we never served. We need to have more questions for the other side and to be much less passive.

The strategy session was by far the best bit. Craig Dalzell talked about opinion polls and what they tell us about Yes and No voters. It was interesting, and surprising in parts, such as when he pointed out that support for independence has dropped to 75% amongst SNP voters, and that we have a real problem with women over 55. Two things that I don’t think Craig mentioned was looking at how Leave/Remain corresponds to Yes/No, and to what extent the support for independence is caused by where you live – for instance, is the North East turning Unionist?

Stewart Kirkpatrick was better than I’ve ever heard him – he’s clearly done a lot of heavy thinking about what went wrong last time. One recommendation he made was setting up a lot of very specific Yes groups, such as Pensioners for Yes. I think this is a wonderful idea, and one that should happen now.

One thing Stewart didn’t mention – but I think it relates to this – is that this needs to be connected to chapping doors. As a Danish Yes activist, talking to random voters isn’t a great use of my time – it easily becomes a talk about why I ended up in Scotland. I should be talking to immigrants from Scandinavia, Germany and the Netherlands, because I think I’d be better at convincing them of the merits of voting Yes than an activist who was born and bred in Scotland. In the same ways, activists from England, those who are working in the NHS, the pensioners, the Leave voters, and so on, should all be sent to be right doors. In other words, Yes Scotland II should create a database of people’s origins and interests and use this to make activists chap on the right doors.

As the last bit of this session, Lesley Riddoch hosted an interactive session where she was walking around the hall with a microphone. It was probably the best bit of the day – there were just so many knowledgable people there with really interesting things to say.

The movement session was weak. Tommy Sheppard spoke well on behalf of the SNP, but most of the speakers couldn’t keep to their allocated time, and even though many interesting things were said, I couldn’t really concentrate any longer.

Finally Patrick Harvie gave a rousing speech to send us all off.

If the SIC are to hold another event like this (and I hope they do!), here are a few bits of advice: (1) Fewer speakers: Although almost all the speakers were interesting, it was too much for one day. Perhaps it’d be better to have parallel sessions. (2) More interaction: Most people were desperate to talk. There should be more interactive sessions, and perhaps also an opportunity to break up into smaller groups to discuss specific topics. (3) A buffet lunch: All 800 of us were supposed to find a place to have lunch, finish it and come back within a hour. It would have been better to have had a huge buffet lunch for everybody so that you could have a good blether while eating.

One general sentiment that I picked up was that people are desperate to start campaigning again. However, waiting for the SNP to fire the starting gun is pointless, because we need as much time as possible to convince people. At the same time, it’s hard to campaign without some sort of central office, so we need some sort of Yes Scotland II to be set up as a matter of priority. I think the Scottish Independence Convention might have to play that role, given that all major players seem to be happy to work with them.

If the SIC are happy to become Yes Scotland II, I don’t see why we can’t start campaigning tomorrow to create the majority for independence that we need to escape the hard and chaotic Brexit that Theresa May and her merry Brexiteers have in store for the UK.

People and companies are starting to leave the UK – we need Indyref2 soon!

The UK government seems to be moving towards a hard Brexit, perhaps even a chaotic one. Of course it might well be that they’ll change their minds after a few meetings in Brussels, but people and companies are already starting to act to protect themselves in case worst comes to worst. It’s clear from the Facebook forum for EU citizens in the UK that a large number of people are already starting to leave the country, and in this article the Financial Times warns that companies will leave soon if there isn’t a transitional deal to prevent Brexit from kicking in as soon as 2019:

The uncertainty over losing rights has made UK-based businesses call for early transition guarantees. Without those, big banks in London say they will take decisions assuming there will be no transition.

If there is no agreement by March 2018 — basically one year before Britain’s formal exit in 2019 — the value of the interim deal diminishes dramatically for the UK. Companies would already have taken action to protect their own interests. The Treasury is alive to the risk of a City exodus if transition terms are not clear at an early stage.


That leverage is strengthened by another cold calculation in Paris, Brussels and Berlin: the longer Britain waits for a transition deal to be discussed and agreed, the more likely businesses will decide to move or shift investment away from the UK. For the EU-27, late agreement on transition would maximise relocation while still avoiding a “cliff edge” — sudden and disruptive change for businesses stemming from a sudden exit.

So people have started leaving already, and companies will follow soon, and unfortunately they’ll leave Scotland, too, unless it’s clear that we’re likely to remain within the EU. If we don’t hold Indyref2 till Brexit is done and dusted, they will all have left and found permanent new homes elsewhere, and they’ll be extremely difficult to tempt back to Scotland.

I’m not saying that we need to hold Indyref2 very soon – but just announcing that it definitely will be held in 2018 will make people and companies delay a move away from Scotland, and it might make companies in the rUK explore whether a move to Scotland would be cheaper and easier than relocating to Dubling, Paris, Amsterdam or Berlin.

Indeed, just announcing Indyref2 is likely to have a beneficial effect on the Scottish economy, so I reckon Kenny MacAskill is worrying needlessly when he thinks the economy is doing too badly to allow us to win a new independence referendum now.

If companies are leaving the rUK (but not Scotland) in great numbers during the Indyref2 campaign, surely that will be a great reason for many people to vote Yes.

However, we can’t afford to wait till they’ve all left before we call the referendum. Nicola Sturgeon has been saying exactly the right things recently, reassuring people and companies in Scotland that we won’t be leaving the Internal Market because she’ll call the referendum if the Brexit isn’t soft.

I expect the exodus away from the UK will speed up drastically once Article 50 gets triggered, so that would probably be the best time to announce the date for Indyref2 to ensure that Scotland doesn’t get completely flattened by the Brexit train crash.

An extra referendum to cheer up the unhappy ones?

They Call Me Mellow Yellow
They Call Me Mellow Yellow.
Wings over Scotland is asking how we can prevent Yes-Leave voters from becoming No voters and suggests that the SNP should promise a referendum on EU membership post-independence:

We’re increasingly coming to the view that the answer is for the SNP to commit to a second EU referendum in the event of Scotland becoming independent.

Now, we can hear a lot of people sighing already. FOUR national referendums in the space of about five years (we’re not including the AV one, which nobody cared about) would be an awful lot of democracy and an awful lot of campaigning.

But we can see no other way to cut the Gordian knot of the electorate coming to decisions that contradict each other.

I fully understand the reasoning, and it’s an argument that has crossed my mind, too. However, I think it would be a bad idea.

Firstly, I fear it will put off many No-Remain voters, which is the very group we need to convince to obtain a Yes vote next time. We’ll need to argue till we’re blue in the face that the extra referendum of course is a formality that will of course be won by the pro-EU side, and that’ll turn off the exact voters that the referendum was designed for.

Secondly, as I’ve argued in another blog post, there simply aren’t that many Yes-Leave voters left in the Yes camp. There are many, many more No-Remain voters that could be convinced by a Scotland-in-the-EU campaign than there are Yes-Leave voters who might vote No because they hate the EU so much.

Thirdly, all signs are that the negative consequences of Brexit will become much more visible over the next year. It would be foolish to have committed to a Scottish EU referendum if Brexit turns toxic.

Finally, we mustn’t forget – as I’ve said before – that we cannot win a referendum by appealing only to Yes-Remain and Yes-Leave voters. Those two groups together add up to about 45% of voters, as Indyref1 showed. We have to win over a sizeable chunk of the No-Remain voters. As the Brexit referendum demonstrated, Yes-Remain plus No-Remain add up to 62% of the Scottish electorate. That’s the way to win Indyref2. Chasing Yes-Leave voters is a dead end, and especially so if doing so means turning away No-Remain voters.

Stands Scotland where it did?

MovementsIf we take the Panelbase poll from September (which divided the Scottish electorate into four groups, Yes-Leave, Yes-Remain, No-Leave and No-Remain) and combine it with the findings from the recent YouGov poll that found that 15% of the voters who voted Yes in 2014 would now vote No and that 10% of former No voters have moved to Yes, we can draw an interesting graph.

I’m assuming that the two groups losing voters are Yes-Leave and No-Remain because they’re both desperately unhappy with what’s happening. So in the pie chart above I’ve split Yes-Leave into Yes-Leave-Yes (bluish yellow) and Yes-Leave-No (bright yellow), and No-Remain into No-Remain-No (green) and No-Remain-Yes (turquoise). Of the two groups changing their Indyref stance, Yes-Leave-No is slightly bigger than No-Remain-Yes (7% vs. 5%). This is consistent with the fact that YouGov found a tiny drop in the support for Yes.

So basically the polls are practically static because we’re losing slightly more voters to No than we’re converting to Yes.

We should be optimistic, however. We’re unlikely to lose many more Yes-Leave-Yes voters to Yes-Leave-No – surely most of the remaining ones are so strongly pro-independence that nothing can convert them to No – and the Yes-Remain voters are unlikely to go anywhere so long as the Scottish Government remains pro-EU. At the same time, 24% of voters are still to be found in the No-Remain-No camp, and one would expect more of them to drift towards a Yes when it becomes a certainty that the UK is heading for a hard and messy Brexit with no special status for Scotland.

In other words, I expect the polls will start shifting towards Yes soon.