[Skip to Content]

Register to receive the OMFIF Daily Update and trial the OMFIF membership dashboard for a month.

* Required Fields

Member Area Login

Forgotten Password?

Forgotten password

Scottish independence is unromantic but logical

Scottish independence is unromantic but logical

London’s interests not served by impeding trade with Scotland 

by James Brazier

Wed 17 Sep 2014

OMFIF is an independent non-aligned organisation working with different institutions and jurisdictions and does not take a political or ideological stance on issues of interest to our members and counterparties. The following is a point of view offered by James Brazier, OMFIF’s Head of Publishing, in light of this week’s referendum on the future of the UK.

Scotland is enduring another 'rough wooing' from England. The first to be given this name was a conflict between the countries in the mid-1500s, when England's Henry VIII tried to force a marriage between his son and Mary, Queen of Scots. Today, a 'rough wooing' is equally apt to describe the anti-independence No campaign. The No approach has been that of a husband, threatened with divorce, who sternly advises his wife she would be destitute without him. Perhaps not surprisingly, to many Scots this unromantic argument has proved neither popular nor convincing.

The No campaign has summoned visions of the kind of financial collapse that befell nearby economies six years ago. Critics of the Yes campaign's leader, First Minister Alex Salmond, point out that until 2008 he had claimed a free Scotland would join an 'arc of prosperity' with Norway, Iceland and the Republic of Ireland. His references to the latter two countries faded mysteriously after the implosions of their economies post-crisis. Instead, Salmond now talks mainly of Norway.

Yet the Irish and Icelandic economies are recovering, and more quickly than larger continental powers. Ultimately, they may emerge stronger as a result of their reconstruction. The drumbeat of financial doom emanating from London seems excessive. Any immediate financial turbulence created by a Yes vote will subside well before Scotland becomes formally independent. An independent Scotland would have a narrower economic base than the UK, and be more exposed to oil-price fluctuations, but no-one in Scotland is likely to starve, any more than they did in Iceland and Ireland.

And Scots have reason to question financial lectures from London. While Scottish banks – RBS and HBOS – were at the epicentre of the 2008 crisis, London's now-defunct Financial Services Authority was the regulator on whose watch the meltdowns occurred, and the English bank Barclays was central to the later scandal over the manipulation of LIBOR. Six years on, the British government has secured few (if any) convictions of errant bankers.

The alienation of non-Londoners from the capital is a growing theme of British political life. More than in most other countries, 'provincial' has become a synonym for 'close-minded' and 'backward'. London revels in its cosmopolitanism. Its media celebrate the claim that Britain's capital is France's sixth-largest city, in terms of its French population, a claim lent credence by successive French presidents canvassing for votes in the city. Entire job categories exist in London that are not found elsewhere on the island: options trader, satellite underwriter, City remembrancer. Westminster appears ever mindful of the City's advice, irrespective of whether that advice represents domestic or international opinion. London's mayor Boris Johnson is among the UK's most high-profile politicians and holds views, such as opposing EU efforts to cap financial-sector bonuses, that would be politically unviable outside south-east England.

Many Britons, including Scots but also some members of the UK Independence Party, now see London as an overbearing city-state that no longer resembles the country it rules – neither economically, nor demographically, nor culturally. In their eyes, London declared its independence some time ago. Its relationship to the rest of the UK has become that of a disinterested viceroy in the days of empire, directing the 'natives' for its own profit. The time is ripe for a less jaded administration in Scotland.

That London cares only about its own financial interests forms the basis of Salmond's negotiating platform. He predicts that after the fuss dies down, England will permit Scotland to use sterling, and keep open the shared border, and do nothing else that will destabilise an independent Scotland, because Scotland and England will be each other's largest trading partners. Any fits of pique the English display after a Yes vote will ultimately be overridden by the City – and its interests are not served by impeding trade with Scotland. This is an unromantic logic but one, ultimately, that Salmond has understood better than the leaders of the No campaign.

Tell a friend View this page in PDF format