“Some of us fervently believe in Scottish independence,” said the Guardian commentator Simon Hoggart, at the height of the World Cup footie wars, “they would be so much happier without us”. Well, would we?
Other small countries in Europe seem to be pretty happy on their own. Take Catalonia, the already devolved Spanish region, which last week voted three to one in favour of a new Statute of Authority which gives it national status, plus extensive powers over taxation, judicial affairs and immigration. No regrets there. At the other end of the economic spectrum, we have Slovakia, which also went to the polls last week and is forming a new left-of-centre coalition government.
Slovakia’s case is fascinating. It was regarded as an economic basket-case at the time of the “Velvet Divorce” from the Czech Republic back in 1993. Rather like Scotland today, it was regarded as ‘provincial’, backward and dependent on the richer, cosmopolitan Czechs. Not any more. Slovakia is now becoming an industrial powerhouse and the EU’s fastest-growing economy. Peugeot’s new plant at Trnava is one of the biggest in the world, and takes over much of the production that used to take place at Ryton in Coventry.
So, it’s not just the “original” small nations of Europe like Norway, Finland, Ireland which are doing well. It is looking increasingly as if Scottish-sized nations of around about five million citizens may have competitive advantage in the European Union. Catalonia and Slovakia have done well out of autonomy, even though the former has one of the highest and the latter one of the lowest wages in the EU. They are very different societies in many ways, and have different histories. But what they demonstrate is that regional independence, far from being a recipe for decline and introversion, can unlock latent economic and cultural dynamism.
Yes, size matters. It’s not just about oil or the possession of other natural resources. Small economies are, in many ways, better suited to the new economic political arrangements in the European Union thant the old, multipurpose nation states. They are nimble enough to adapt to a rapidly-changing global economic environment and don’t have the kind of political, cultural and class divisions that drain the life out of multinational entities like the UK.
In an over-centralised state like Britain, where London dominates the mass media, political decision-making and the allocation of public investment, it is very difficult for a province like Scotland to alter its own circumstances. Scotland has long had a lower growth rate than England, but is unable to rectify this by lowering business taxes or developing its own infrastructure. Or, indeed, formulating its own immigration policies.
In Britain, all roads lead south and that’s where Scottish entrepreneurs, professionals and skilled workers traditionally gravitate. They might still do so after independence, of course, but at least a Scottish government would be able to legislate for tax policies to attract them back.
Or replace them. It is now widely accepted that the UK’s recent economic growth could not have happened without the influx of low paid black and Asian labour. This has now run up against the limits of political acceptability among the white English urban community, so the government has responded by clamping down on immigration. But the Scottish economy is in a different cycle and needs more of it, not less – as the Fresh Talent initiative demonstrated.
So, there really is no doubt that Scotland could survive and thrive as an independent state in Europe, and most economists I speak to agree. Membership of the European Union has eliminated many negatives like separate currencies (except of course in Britain) and barriers to the movement of labour and investment. Guaranteed access to a market of 300 million, plus political representation in the councils of the EU, have removed the fear of being “too small to matter” which used to afflict small countries.
In Scotland autonomy has always been presented as a threat to economic stability. Labour’s 1999 election slogan, “divorce is an expensive business”, pretty much summed up the state of opinion at the time of devolution, and many Scots still believe it. Certainly, an independent Scotland would would have a structural non-oil deficit of several billion pounds if the Barnett formula, which allocates public spending, were to be wound up tomorrow.
However, despite what Lord Barnett says, his formula is already being wound down under the new population formula, according to economists like Strathclyde University’s Dr Karen Turner and Stirling’s Prof David Bell. Convergance is happening. Anyway, budget deficits needn’t be terminal – as America has demonstrated – and can be managed for many years. Britain has historically run budget deficits of around 50 billion without any economic distress. Moreover, with 12 billion a year in oil revenues going south, the Scottish budget deficit is in reality a theoretical one.
So, perhaps Hoggart and co are on to something. The English chattering classes, anyway, show every sign of being fed up with Scotland. “The loss of one-twelfth of our population”, said the former Tory Defence Minister Michael Portillo in the Sunday Times last week, “in a region that drags down our national performance could not harm us”.
The irony is that in other old nation-states like Spain, the talk is all about keeping the country together and avoiding fragmentation. Before the referendum campaign got underway a Madrid general even proposed a military invasion of Catalonia to prevent secession. It’s the same in Italy and France, where central governments are increasingly anxious about the example set by the new small nations.
But the metropolitan media in Britain seems relaxed about Scotland going it alone. The big issue in England right now is multiculturalism and ethnic diversity, which even members of the liberal chattering classes, like the editor of Prospect magazine, David Goodhart, fear might have gone too far.
It is not acceptable to criticise immigrants as dependent, lazy spongers, who are undermining the integrity of the nation, but it is acceptable, apparently, to attack the Scots in this way, and claim that Gordon Brown cannot be Prime Minister because of his nationality. Perhaps what we are seeing here is a displaced ethnic antagonism. If so, the UK is surely doomed.