The English are starting to gang up on the Scots – with very unpredictable consequences. Yesterday's announcement from all three main Westminster political parties stating that Scotland would not be able to keep the pound will have lasting ramifications. Some of these will be technical, but nonetheless profound. It is still an open question whether an independent Scotland will be able to join the EU.
If they are allowed in they will, under the rules of entry, have to adopt the euro. Distaste for the European currency is one thing that does unite the UK: the extent to which there is visceral loathing for the euro amongst almost all of the British is under-appreciated in the rest of Europe.
Scottish voters may respond to this latest move in ways not to the liking of its authors. If they see it as bully-boy tactics, the independence camp may well end up getting a boost. Campaigners for independence want to keep all of the oil and little of Scotland's share of the UK national debt. As George Osborne has said, marking the birth of a new Scotland with, effectively, a massive default may lead to one or two problems for the Scottish exchequer.
Scotland has a large financial sector, which, like the rest of the country’s business class, has responded with some nervousness to all of this. I am reminded of the campaign by Quebec to leave the rest of Canada: at the height of that battle, a good few years ago, Canada’s finance industry effectively decamped to Toronto from Montreal. Quebec didn’t get its independence but lost a lot of finance, and other, jobs. The prolonged political uncertainty prompted lots of people in business to vote with their feet.
A new Scotland will need tax revenues. The Scotch Whisky industry is already concerned it will be targeted. It is one business that cannot move, even if it wanted to: Scotch has to be made in Scotland. Immobile businesses that are very profitable make for wonderful cash cows for finance ministers.
If Scotland does confound the opinion pollsters there will be a prolonged period of negotiation between Alex Salmond and David Cameron about what happens next: how the oil and the debt will be split. Lots of people will undoubtedly make their own minds up before those talks reach a conclusion. If Scotland does secede it won't, in all likelihood, stop there. It is hard to imagine it being business as usual for the rUK [rest of the UK] as it is now being called. Economically, and arguably politically, the UK only works because of the fiscal transfers from London and its hinterland to much of the rest of the union.
As England looks increasingly like a massively successful global city state – London – serviced by the rest, that city state will wonder just what the new union is for. The Welsh are not clamouring for independence. They only narrowly voted for their own regional assembly and they are not natural hardline nationalists. The English coexist with their Welsh cousins. The two economies and social systems are much more integrated than are the Scots with the English. Wales doesn’t have separate legal and education systems in the way Scotland does. Just as important, for hundreds of years now, the Welsh have signalled they are happy with the union; they haven’t caused the English much trouble and they don’t ask for a lot.
It is a stretch to argue along similar lines for Northern Ireland. I always thought Sinn Féin missed a trick by not running PR campaigns pointing out just how much the North costs English taxpayers. The money that flows from what’s left of the UK to Northern Ireland may not be handed over with such little complaint if we enter an rUK world. If Scotland does vote yes there will be consequences for everybody on these islands, not just the Scots.
