Five European Questions in the Scottish Elections

Kirsty Hughes | 5 April 2021

© 2018 SCER

Europe has not figured much yet in the Scottish elections. But, given the mounting, ever more visible and entirely predictable damage from Brexit, European questions are likely to impact on voting choices and on support for independence.

The SNP and Greens probably have the clearest European policies in that both opposed Brexit, including the trade and cooperation agreement Boris Johnson signed up to in December, and both aim at independence in the EU (while it remains unclear if the Alba party will support the European Economic Area (EEA) option instead). But challenging questions remain on the route to, and impact of, rejoining the EU.

The Tories support Johnson’s hard, immensely damaging Brexit – and have little or nothing to offer by way of softening any of the blows their UK-EU deal has resulted in. Labour not only voted for that deal – to avoid, they said, ‘no deal’ – but are now barely challenging its impacts and have no clear policies on how they would change UK-EU relations compared to the damaging and confrontational set-up the UK government has now established.

The Lib-Dems used to be a clear anti-Brexit, pro-EU party but UK leader, Ed Davey, told the BBC two months ago the Lib-Dems were not a ‘rejoin’ party causing some outrage in the grassroots – followed by some damage-limitation explanation that in the ‘long term’ the aim was indeed to rejoin. Both Labour and the LibDems are more comfortable, for now, talking about creating a more federal UK than talking about that federal UK rejoining the EU.

Five big questions should be centre stage in any discussion of Europe and the EU during the election.

(1) How to Tackle the Damage from Brexit and the UK-EU Deal?

Boris Johnson’s trade and cooperation deal with the EU and the 2019 withdrawal agreement have put an extraordinary and wide-ranging set of barriers and border challenges in front of a range of sectors from fisheries to music and the arts, from tourism to financial services to agriculture to universities. Trade with the EU has been falling since the deal came in at the start of the year (while Northern Ireland faces other challenges from the internal border between Britain and Northern Ireland that Johnson chose to negotiate).

The Conservatives in particular should be posed the toughest of questions on why they have imposed such an economically damaging deal on Britain. And all parties should be asked what short term changes should most urgently be made to tackled at least some of the damage (such as align to EU plant and animal health rules, rejoin Erasmus and so on).

(2) What Should Scotland’s Relationship be with the European Union?

This is an obvious and a core question. For the pro-union parties, the answer presumably is that Scotland’s relationship with the EU should be whatever the UK’s relationship with it is (although that relationship is now one of Great Britain with the EU and a different Northern Ireland-EU relationship).

The Tories surely have to defend the relationship they are establishing – not only the economically damaging trade deal but the political and security damage being done by the the fractious and confrontational approach the UK government is taking to EU relations. Both Labour and the LibDems need to say what they would do differently in the short and medium term.

The SNP and Greens need to be clear on what they see as the main steps to re-joining the EU after independence: how quickly might it happen, what will be needed in the transition period between leaving the UK and rejoining the EU, what will the implications of rejoining be (including for future relations, both political, economic and security, with the rest of the UK)?

Research done by the Scottish Centre on European Relations and other think tanks (including the recent report by the Institute for Government) have argued that an independent Scotland could rejoin the EU relatively swiftly – probably within 4-5 years, with a tailored EU association agreement providing the basis for the Scotland-EU relationship in the meantime. There is no need for an independent Scotland to first join the European Economic Area – the EEA is an alternative not a transition route (and one that would leave an independent Scotland without a voice at the EU’s top tables and facing a customs border to the EU). Will pro-union and pro-independence parties engage on these issues or attempt to side-step them?

(3) What Border Challenges will an Independent Scotland in the EU Face?

This is another key question on European issues for Scottish politics. It is not an easy one for the different parties for different reasons.

If an independent Scotland was an EU member state, while the current UK-EU trade and cooperation agreement remained in place, then that would be the main basis for the Scottish-rUK border (although in fact, more precisely, for the Scottish-England & Wales border given Northern Ireland’s different position). The Scottish-England/Wales border would be an external border of the EU. The visible damage and challenges such a border can impose has been seen since the start of the year in British-EU trade.

An independent Scotland would not face an identical challenge to Brexit in that it would re-open borders with the EU’s single market by rejoining it and its customs union (and benefitting from the EU’s international trade deals). It could attract more foreign direct investment in this position and it would benefit from being part of EU free movement of people again. It might have a double benefit of being part of the UK-Ireland common travel area as well. And it could further ease some of the border challenges with the rest of the UK by doing a range of bilateral services deals.

Even so, Scotland trades three times more with the rest of the UK than the EU today and this argument will be used by the pro-union parties. But there are also serious challenges here not least for the Conservatives: if Brexit is, in their view, not damaging to the UK despite the hard borders their Brexit deal set up, then it is not logical to argue a hard Scotland-England border is damaging. The LibDems will be able to make a more consistent argument here – and, in principle, Labour could too but that would surely require Labour to start critiquing the UK-EU trade deal that they voted for. Meanwhile, the SNP and Greens need some serious analysis of the costs that borders will inevitably impose and what the counter-acting benefits may be in the shorter and longer term.

(4) What Currency Would an Independent Scotland Use in the EU?

The currency question is a wider one for the independence debate than just its EU dimension. But there are important EU issues here.

The SNP’s current policy is to initially use the pound – sterlingisation – before moving, at some point, to a new Scottish currency. In the EU context, the first key question is whether an independent Scotland could join the EU while using the pound (and without the actual agreement of the Bank of England to using sterling). In terms of the EU treaties, this looks difficult. EU member states have to show they can aim at price stability through their monetary policies and, if they are outside the euro, they must treat their exchange rate with the eurozone as a matter of common concern. Sterlingisation would not allow this to be done.

Whether this would be a complete block to rejoining the EU until Scotland had its own currency is, however, a political question as well as a treaty question. If Scotland had met all the other EU accession criteria and was ready to join once the treaty was ratified (likely to take 1-2 years), it could conceivably ask for a short transition period, with a clear plan outlined as to how and when a new Scottish currency would be introduced, during which it might use the pound during its first 2 or 3 years in the EU. This would be an unprecedented situation and transition proposal and hence a political decision for EU member states.

Any accession candidate country would, of course, have to commit to joining the euro. But an independent Scotland would be unlikely to meet the criteria for joining the euro for some years. So it would be expected to join the EU either with its own currency or in transition to its own currency. Whether Scotland would then, like several other member states, stay indefinitely using its own currency (notably like Sweden) is again an open question.

Pro-independence parties need clear lines on these questions for EU accession while pro-union parties are likely to pose challenges around whether currency questions could delay accession.

(5) Will Debt and Deficit Block an Independent Scotland Joining the EU?

As with currency, the potential debt and deficit levels that an independent Scotland may have are questions for the wider independence debate as well as having a specific European context.

Even for member states outside the euro, EU debt and deficit rules apply, including the 3% government deficit rule. However, the Covid crisis has upended EU member states’ finances, just as it has for the UK (and the US). And, at least until 2022, the EU’s debt and deficit rules are suspended with the main focus on how to implement the EU’s big multi-billion euro recovery fund.

It’s rather clear that member states are not going to get close to the old EU debt targets in the next few years. There is also debate about changing these rules, so by the time an independent Scotland was rejoining the EU, it may face a different situation to the current (but suspended) rules. It’s also the case that here too a transition period may be negotiated – albeit on the deficit that would need to be very clear and not very long (as Croatia did).

Debt and deficit issues will remain a core question in the constitutional debate, and in the EU debate. There are questions on these issues that should be asked during the Scottish election – but also too asked of how the UK will manage its own finances in the future.

So far, European issues have not yet figured in any detail or depth in the Scottish elections but in the face of the damage of Brexit, and the centrality of the constitutional debate, it is vital that these big questions do come to the fore.

 

Kirsty HughesKirsty Hughes | Twitter

Scottish Centre on European Relations

Dr Kirsty Hughes is Director of the Scottish Centre on European Relations. She is a researcher, writer and commentator on European politics and policy, and she previously worked for a number of leading European think tanks.