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Scotland's economic case for independence must be 'politically bomb-proof'

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Scottish independence is not about sympathy but rather the grounds for its cessation from the U.K. should be based on "pure economic logic" with a "politically bomb-proof" plan to boot.

Scotland's First Minister Nicola Sturgeon defiantly declared her mandate for a second referendum was "beyond question" after she received formal backing by the Scottish Parliament on Tuesday.

However, the U.K. government has repeatedly blocked calls for a vote until after the Brexit process is complete with Britain's Prime Minister Theresa May insistent that "now is not the time".

May officially pulled the Brexit trigger on Wednesday and, in doing so, kick-started the two-year countdown for Britain's departure from the European Union.

"If and when we get a chance to vote for independence then we need to make sure we put forward a technically accurate and politically bomb-proof plan," Stewart Hosie, economy spokesperson for Scotland's National Party (SNP), told CNBC in a phone interview.

"Even with our limited powers we are still growing strongly, since the last recession, our GDP (gross domestic product) has increased more strongly per head than the rest of the U.K. and so it's all the more reason to allow our finance minister more control," Hosie added.

Democratic deficit vs massive uncertainty

Pro-union supporters celebrate as the Scottish independence referendum polling results are announced in Edinburgh, Scotland, Sept. 19, 2014.
Leon Neal | AFP | Getty Images
Pro-union supporters celebrate as the Scottish independence referendum polling results are announced in Edinburgh, Scotland, Sept. 19, 2014.

In 2014, Scotland voted to maintain its more than 300 year old union with the U.K. by 55 percent to 45 percent. However, Scottish citizens backed Remain in the EU referendum by 62 percent to 38 percent while the rest of the U.K. voted to leave.

"It is tempting to think that Brexit is going to be so disastrous that any alternative must be better but two wrongs do not make a right and you've got to make a hard-nosed decision about it. I am sympathetic towards Scotland but then again this is not about sympathy, this is about pure economic logic," Angus Armstrong, director of macroeconomics at the National Institute of Economic and Social Research, told CNBC in a phone interview.

Sturgeon has called for Westminster to approve a second referendum between fall 2018 and spring 2019 in order to base the vote on information available deep into the two-year Brexit negotiations and therefore ultimately rectify a "democratic deficit".

However, May argued it would cause massive economic uncertainty at the worst possible time for Britain.

"Quite simply, Scotland exports two-thirds of its goods to the U.K. which is around four times as much as it does to the EU and you'd have to say it is clearly more damaging to pull out of the U.K. based purely on that measure," Armstrong added.

A hard border between Scotland and the U.K. would certainly appear to have a negative impact for the country should the country look to sever ties with its largest trading partner.

Scotland can no longer boast bumper oil revenues as it could in 2014, nor can it point to significantly higher levels of GDP in comparison to the U.K. yet Brexit, and perhaps even more notably, a so-called "hard-Brexit" without EU single market access has dramatically changed the argument.

Case for independence 'appears stronger' now

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"Two years ago the argument for Scottish independence was completely crazy; it just did not make sense for Scotland to leave the U.K. and the EU at the same time. Now the case appears stronger but still the numbers are hard to make (in favor of Scottish independence)," Jose Rodriguez Mora, professor of economics at the University of Edinburgh, told CNBC via phone interview.

"The country with which the U.K. has the lowest frictions (in terms of trade restrictions) is Ireland; it is easiest for the U.K. to trade with Dublin… but even if you assume Scotland could have the same restrictions as the U.K. has with Ireland right now then Scotland's GDP would still fall by almost 6 percent," Mora added.

Meanwhile, the currency Scotland would assume in the event of becoming independent seems to represent a further stumbling block. Former Scottish First Minister Alex Salmond told the Financial Times that he was open to the idea Edinburgh could abandon its currency union with the rest of the U.K.

In the event Scotland was able to host a second independence referendum and if its citizens then voted to leave the U.K., the European Commission has said an independent state would need to apply for EU membership. The process is long and arduous and the European Commission President Jean Claude Juncker has said no more states would be admitted until at least 2020.

"There are still so many things that can happen that making any kind of predictions is just so silly, it is clear though that this argument has nothing to do with economics… it is to do with nationalism instead," Mora concluded.