The Questions of Scotland’s Independence: The Rise of Scottish Nationalism, Trade Concerns, and the Future of Economic Regulatory Policies

Gavin Martin 

Associate Editor

Loyola University of Chicago School of Law, JD 2023

Collectively, four countries make up the United Kingdom (U.K.), including England, Scotland, Wales, and Northern Ireland. In 2016, an overwhelming number of Scottish citizens voted to remain in the European Union (E.U.) during the U.K. referendum, which resulted in a 51.89 percent vote in favor to leave. After departing from the E.U. in January of 2020, Scottish industries suffered economic losses due to the ‘red tape’ policies imposed by the U.K., making it more difficult to sell Scottish products to E.U. member countries. As a result, Scotland’s independence and nationalist movement grew exponentially, with forty-five of the fifty-nine Scottish seats in the House of Commons going to the Scottish Nationalist Party, with strong support of seceding from the U.K. Additionally, in 2019, Scotland’s Parliament reconvened for the first time since 1707, signaling the Scotland’s desire for self-autonomy and sovereignty. The possibility of seceding poses questions over the future of economic and social regulatory policies for an independent Scotland.

The double-edged panes of policy windows 

Political scientist John Kingdon coined the term ‘policy windows’ to denote the use of specific catalysts for policy opportunities. These catalysts, or political events, prop open ‘policy windows,’ that convene popular support for legislation or political action. Arguably, one of these opportunities came when the U.K. voted to leave the E.U., propping open a policy window for Scottish independence. Although the exit from the E.U. has strengthen the political case for Scottish independence, Scotland would likely suffer an economic fallout with strained relationships with the remaining U.K. countries. Simply put, Scotland cannot mitigate the long-term costs of the 2020 E.U. exit by gaining independence and joining the E.U. To do so would result in the creation of customs and regulatory frictions between Scotland and the rest of the U.K. A form of these trade frictions would likely be in the form of heightened tariffs from the remaining U.K. countries, but no specific action could be pointed out, until a negotiated exit deal from the U.K. is made. Proponents against Scottish independence have argued, justifiably, that friction with the E.U. would negatively impact Scotland’s economy. This is because trade with remaining members of the U.K. account for £51.2 billion, while trade with the E.U. is estimated at £16.1 billion, accounting for a 104 percent difference. But trade in this respective is not a zero-sum game. Members of the Scottish Nationalist Party have detailed the path forward to economic success w ith independence in their 2014 white paper titled, ‘Scotland’s Future,’ and the creation of the Sustainable Growth Commission in 2016. Summatively, using the E.U. departure as the policy catalyst for Scottish independence is a double-edged windowpane. It may have strengthened a political case for self-autonomy by increasing support for a future Scotland that is a part of the E.U., but in critical areas, it arguably makes the economic case more challenging during the transitory process to independence with an inability to offset the cost of lost trade with the U.K.

Are deregulatory economies the pathway to Scotland’s growth, post-independence?

To slow the economic challenge of customs and regulatory friction with the remaining members of the U.K., an independent Scotland will likely practice one of two forms for emerging small state economies. Small state growth is modeled by economic theory which dictates that emerging countries maintain a stable economy with high growth indexes through two models. A portion of these small states have stabilized and thrived by cutting spending and deregulating their economies. Subsequently, said states would have to endure growing inequalities among socio-economic classes. Some deregulatory policies that have been made in the past from countries in order to target growth have been in the sectors of banking, trade, energy, and generally mass privatization. Conversely, other small countries have maintained high public spending, which is written-off as investments and a means of reducing large gaps in earnings among citizens. If led to independence by the Scottish Nationalist Party, who are self-described as a “progressive” party and adhering to the principles of “social democracy,” the extremes of deregulation might be off the table. If given the opportunity to secede from the U.K. and granted sovereignty, Scotland would have to make difficult decisions about spending, taxes, economic regulatory practices, and long-term planning.