Today Nicola Sturgeon, the First Minister Scotland, announced that she would seek a second referendum on Scottish independence. She is proposing a referendum in the autumn 2018 or early 2019, to give Scotland an opportunity to vote in the context of the emerging Brexit deal negotiated by the UK government. She is presenting the choice as leaving the EU by remaining in the UK or remaining in the EU by leaving the UK (with an independent Scotland seeking EU membership).
This adds further uncertainty for any organisations operating in Scotland or across the Scottish border. If this goes ahead (and I think it will happen, albeit maybe unofficially or maybe in 2020) then it will mean that people in Scotland in effect have a referendum on the outcome of the UK Government’s Brexit negotiations.
What happens next?
Nicola Sturgeon is first seeking the approval of the Scottish Parliament; she will then seek the agreement of the UK Government and UK Parliament to hold a referendum.
Will she get agreement?
The Scottish Parliament will probably agree – with the Green Party MSP giving the SNP the necessary majority. Theresa May may or may not agree – if she does she may specify that the referendum should be after Brexit is completed – avoiding a referendum result that could affect the UK-EU negotiations. The Scottish Government could still go ahead – and hold an ‘unofficial’ referendum. Some sort of referendum seems likely at some point between autumn 2018 and 2020.
What is the likely outcome?
Opinion polls since the last Scottish referendum have been steady, with a majority in favour of staying in the UK. Nicola Sturgeon is gambling that this will change if the referendum is as much a vote about staying in the EU and a vote on the deal that the UK government negotiates for Brexit. This certainly creates a different dynamic for any independence referendum, which could tilt the balance in favour of independence.
If Scotland voted for independence, what would happen when?
It seems unlikely that a vote in favour of independence would enable Scotland to seamlessly stay in the EU. If a referendum occurred in late 2018 / early 2019 and the result were in favour of independence then there would be little time to negotiate with the EU to remain in Europe before the UK left the EU. The accession of new members into the EU takes many years and there are countries already in the waiting list. On the other hand, Scotland would already be operating within EU rules and European leaders can – when they have to – take rapid decisions if it suits them. Equally, it would take time to negotiate the new arrangements between Scotland and the rest of the UK. Scotland might leave the EU as part of the UK; then become independent; then join the EU. It seems most likely that there would be a period of negotiation and limbo for a couple of years – but this might take longer or could be fast tracked. The simple answer is we do not know!
This is another element of uncertainty in the business environment. As with Brexit, the key point is that organisations need to be as agile as possible in the current global political environment. They need to keep plans under review and be ready to change tack quickly.
Organisations in Scotland or with cross-border activity with Scotland should consider starting some scenario planning for possible Scottish independence (one of a number of scenarios) – perhaps as part of their Brexit planning. But it is too early right now to get into detailed planning (we do not yet know for sure if there will even be a Scottish referendum, let alone what the result will be) – there will be plenty of twists and turns over the coming months before we have any better idea of how things may pan out.