5 May 2021updated 22 Jul 2021 1:22pm

How would Scotland work inside the EU? Five years on from Brexit, nationalists still don’t have a clue

Even as domestic support for independence has risen, there has been little agreement within the nationalist camp about what is politically possible.

By Helen Thompson

In the 2014 Scottish referendum, Alex Salmond promised voters national independence. What he actually offered them was a confederated union nested in a wider European confederal structure. This new Scotland would have remained within the UK’s monetary and monarchical unions as well as in its Common Travel Area with Ireland. By acquiring EU membership, as Salmond promised, an independent Scotland would also have stayed in a single market and customs union with the rest of the United Kingdom (referred to in Scotland as rUK).

This model would theoretically mean that Scottish voters would avoid being outvoted by their English counterparts in UK general elections to determine who would exercise the powers hitherto reserved for Westminster, including the fiscal regime for the Scottish oil and gas industry. After appearing to have this prize in its grasp, the SNP fell short in 2014 because the UK government insisted that monetary union inside the UK would be unobtainable. When the ballots were counted, too few voters were willing to call Westminster’s bluff.

The morning after the Brexit referendum in 2016, Salmond’s successor, Nicola Sturgeon, declared that the Scottish government would soon ask Scottish voters to choose again. But Sturgeon has done little to engineer another referendum. This is largely because the 2014 prospectus for confederation has come unstuck and a project more akin to independence has proven hard to forge.

The difficulty is in part a matter of external change. Seven years ago it was uncertain whether the Scottish government could have maintained a single market and customs union as well as the Common Travel Area with rUK by securing Scottish EU membership on the same terms as the UK. Now, the choices are painfully clear: since the UK is outside the EU, Scotland and the rUK can only share a single market and customs union as the United Kingdom. Faith in future oil and gas revenues has also evaporated. Global oil prices are a third lower than in 2014 and investment in the oil sector is in crisis. Rather than banking on a fossil fuel fiscal bonanza, the Scottish government has a net-zero greenhouse gas emissions target for 2045.

The 2014 referendum defeat also proved consequential for Scotland’s internal politics. Most of those pressing for Scottish secession have concluded that ongoing monetary union with rUK is a non-starter. Since a post-independence currency, EU membership and Scotland’s fiscal position are all connected, everything around Scottish independence has had to be rethought.

Even as domestic support for independence has risen, there has been little agreement within the nationalist camp about what is politically possible. For Sturgeon, Scotland must become a member of the EU while forsaking any monetary sovereignty. This would leave the Scottish government free to borrow in sterling but without a future Scottish central bank having the capacity to enact a programme of quantitative easing to support that debt. Without a national currency that could be placed in the Exchange Rate Mechanism, it would also mean trying to negotiate EU membership with an opt-out from joining the euro.

Leading his new breakaway party, Alba, Salmond damns this form of independence as strategically hopeless, as if Sturgeon is not serious about obtaining anything other than more fiscal resources from Westminster. He thinks Scotland should do the opposite of what his successor proposes: start devising its own currency and give up on the idea of EU membership. Insisting that “fix[ing] the economics” must come first, he wants Scotland to pursue membership of the European Free Trade Association and stay in the UK customs union and Common Travel Area. Only in the medium term, says Alba’s manifesto, should the question of negotiating EU membership be decided, and then only if the Scottish people express their consent.

In one respect, less has changed than Salmond supposes. The confederal structure of the EU is the context in which the possibilities for restructuring the Anglo-Scottish Union have long existed. How its fault lines mapped on to those in and around the UK was already evident in 2014. It was the start of the eurozone crisis in 2009 that dissuaded the SNP from betting on the euro as Scotland’s future currency. It was the same crisis that unravelled David Cameron’s attempts to reboot the UK’s EU membership with a referendum. Brexit, then, increased the desire in Scotland for secession but made any version of independence inside the EU more difficult to realise – it created the spectre of an economic border running from the Solway Firth to Berwick.

Yet, as a coherent vision of overlapping confederations has become harder to envisage inside Scotland, the fallout of Brexit outside the country has been to the SNP’s advantage. Compared to 2014, the Anglo-Scottish Union is now part of the political contest at Westminster. Back then, parties united in panic to offer new powers to Holyrood. Now, since the only way for Scotland to have a trade basis for independence is for the UK to rejoin the European single market and customs union, those who want to contest the UK’s relationship with the EU have an interest in encouraging Scottish secession. For the Conservatives, defending Brexit and defending the Union against the SNP have become one.

The simultaneous weaknesses and strengths of the Scottish nationalist cause condemn the Union to instability. There is still no coherent project for independence. But the Scottish question is no longer only a Scottish affair.