Nicola Sturgeon criticised over calls to rejoin EU by expert

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The Scottish First Minister has said she believes there are “strong grounds for hope” that the country will be able to remove most of its coronavirus restrictions next month. Scotland for a time had one of the highest virus rates in Europe. However, Ms Sturgeon said the country was now in a much better place.

Like everywhere in the world, the pandemic has had dire economic consequences for Scotland.

Ms Sturgeon and her Scottish National Party (SNP) have been working to offset the damage done, large parts of it blunted by Westminster’s generous and vast bailout schemes.

She will also be thinking about advancing on her plans to secure a second independence vote in 2023.

But many obstacles stand between Scotland and independence.

One of the most obvious is finance, and how economically viable Scotland may or may not be outside the Union.

According to a Government white paper commissioned ahead of the country’s first independence referendum in 2014, Scotland greatly benefits from being in the UK’s single market, with hundreds of years of integration.

Compiled by the Economic Affairs Committee, the paper’s intention was not to make a pro or anti-independence argument, but to weigh up the economic implications for the wider UK – notably England, Wales and Northern Ireland.

Within the UK, currency, regulation and most taxation are in uniform.

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Economic activity is unimpeded and carries minimal transaction costs, promoting a wide range of benefits like transparency and competition, and the efficient use of resources between Scotland, England, Wales and Northern Ireland.

After 300 years of union, Scotland’s economy and that of the rest of the UK remains closely integrated, the paper noting it is “more truly single than that of the EU”.

At the time of the paper’s publication, “trade with the rest of the UK is worth over two-thirds of Scotland’s output”.

To this day, Scotland’s biggest trading partner continues to be the UK, with the most recent government figures showing the country exported £51.2billion in goods and services to the rest of the UK in 2018 – a rise of £1.2billion on the previous year.

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Former Chancellor Alistair Darling told the white paper that back then 94 percent of Scottish insurance industry products were sold to the rest of the UK and only six percent in Scotland – a figure that remained high at 83 percent four years later.

John Cridland, Director-General of the CBI, said: “The single market is a key UK asset and the certainty and level playing field of rules on tax, law and regulation adds to economic growth.

“We feel inevitably that if there were two independent countries in this one island there would be a fragmentation of the single market.”

The paper went on to note: “The United Kingdom single market has helped the Scottish financial services sector to grow.

“Financial services make up a similar proportion of the Scottish economy as the UK’s.”

However, the Scottish economy is “dwarfed” by the balance sheets of Scottish banks.

At the time, the total assets of Royal Bank of Scotland (RBS) and Halifax Bank of Scotland (HBOS) were over 15 times Scottish GDP, and were more than 20 times its GDP in 2008.

Both figures were and are much higher than for the UK and countries which buckled under the weight of bailing out banking sectors in the aftermath of the crash.

The paper went on to explain that the UK’s single market brings economic benefits to Scotland and the rest of the UK, but how “if it fragmented after Scottish independence, Scotland’s smaller economy would be disproportionately affected”.

While Ms Sturgeon may be thinking about independence, reports this week revealed that Scottish government civil servants have undertaken no second independence case preparations since March 2020.

This was the date in which Prime Minister Boris Johnson ordered SNP ministers to suspend their independence efforts and focus on tackling the country’s health epidemic.

An official response to a Freedom of Information (FOI) request showed no analysis or assessment of the timescale or argument has been officially set out by the Government.

The FOI request added: “As of July 3, 2021, no ministers or civil servants in the Scottish government were working on updating the plan for an independent Scotland from 2014.

“The Scottish government announced on March 18, 2020 that it had paused this work in order to focus on response to the COVID-19 crisis.”

It stressed on resuming the case for a second independence referendum: “Decisions on resuming this work will be a matter for Scottish Ministers to take in due cause”.

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