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March 13, 2017 | Another Scotland Independence Referendum Coming Up: Project Fear Scottish Style Once Again?

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

In the midst of various Frexit, Italexit, and Grexit battles, Scotland’s First Minister Nicola Sturgeon announced she will seek a Second Scottish Independence Referendum.

Recall that Nicola Sturgeon succeeded Alex Salmond as First Minister of Scotland following his resignation in the wake of the defeat of the “Yes Scotland campaign” in the Scottish independence referendum, in November 2014.

The referendum was supposed to have killed the Scottish independence movement. It didn’t. From the first link:

The Scottish National party will launch the process for holding a second referendum on Scottish independence next week, Nicola Sturgeon has said.

She said autumn 2018 to spring 2019 would likely be the best time to hold the vote.

She said the Scottish National party’s mandate for a second referendum “is beyond doubt” after the result of last June’s Brexit vote, in which 62 per cent of Scottish voters backed remain.

The prime minister’s office admitted last week that they expect Ms. Sturgeon to seek a referendum next autumn, though the government would fight to delay any vote until after Britain leaves the EU.

Ms. Sturgeon said she and the SNP had worked “really hard to find agreement” with the government in Westminster, but said “the UK has not moved even an inch towards compromise”, and that the “collapse” of the Labour party has allowed the Conservative government to harden its position.

Theresa May in a Bind?

The Financial Times says Nicola Sturgeon’s Influence Leaves Theresa May in a Bind.

Mrs. May cannot sign off on hard exit terms without risking the loss of Scotland, three-fifths of whose electorate voted for the EU. Such terms would not just threaten material harm to a small, trading economy, they would communicate England’s hauteur to the smaller nation. But if Mrs May softens her line, she must forgo the right to make external trade deals (to stay in the customs union) or accept free movement (to stay in the single market). The first would be death to her governing vision, the second would be unsurvivable.

Alex Salmond was a sinuous operator but Ms. Sturgeon is more emollient towards the many Scots with centre-right views, more attentive to the hard questions of currency and finance that undid the nationalists last time, less conspicuously mesmerized by the sheer sport of politics. She can also raise the prospect of austere Conservative governments in London all the way to the horizon and beyond.

The self-immolation of the Labour party had not started in 2014. Her own party is many times the size it was back then and the consortium of forces assembled against it in a referendum campaign would be fractured, as Labour shrivels and Eurosceptic Tories decide they hate Brussels more than they cherish Scotland.

Against this, Mrs. May’s best hope is to make Brexit a reality and then frame any subsequent vote for independence as a bigger risk than ever. Remaining in the EU is one thing, re-entering it quite another. It is even possible to imagine a brief spell in which Scotland, having faithfully voted for both unions, belongs to neither. Project Fear then, all over again. It is a thin basis for a union but the prime minister is not spoilt for better ones.

Theresa May in a Bind?

The alleged bind is largely an illusion. May is committed to Brexit, and it is the EU, not the UK, that forced a hard Brexit.

Thus, I doubt the position of May changes much, if at all, on account of Nicola Sturgeon.

Project Fear Scottish Style Once Again?

Former UK prime minister David Cameron desperately wanted Scotland to remain part of the UK knowing the Scotts were firmly against Brexit. Theresa May does not have that need.

Politically speaking, a case can be made for the Tories that letting Scotland go would strengthen their hand for a long time to come.

I don’t propose that May would welcome Scotland leaving, rather, she does not have the same urgency as Cameron to keep Scotland a part of the UK.

Perhaps May just lets Scotland decide for itself what it wants to do rather than engage in heavy-handed fearmongering.

Finally, it’s far too early to know how a second Scottish independence vote might go. Upcoming elections in France, Germany, and Italy could easily influence how voters in Scotland feel.

So could a recession,  a messy Brexit, the price of oil,  or a political swing in Scotland or the UK.

Regardless, it’s nearly certain Scotland voters will get one more chance sooner than anyone expected in the wake of a 53.3% to 44.7% remain vote in 2014.

Mike “Mish” Shedlock

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March 13th, 2017

Posted In: Mish Talk

One Comment

  • Avatar bh2 says:

    Scotland would not automatically gain admittance to the EU simply be leaving the UK. More likely, it will be like years in the wilderness hoping to board a sinking ship and with neither union to be part of. Perhaps the French would take them on as a colony, however, so the situation would not be entirely hopeless.

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