Leaving the United Kingdom will be more damaging for Scotland than Brexit, says the London School of Economics Centre for Economic Performance. According to its modelling, the incomes of Scots will plunge as much as 8.7 percent, while trade between Edinburgh and the rest of Britain would increase by almost a third. Saying bye to the union would result in changes to investments, the Scottish government's spending capacity, and Edinburgh would also have to adopt its own currency.
According to the forecast, independence and subsequent EU membership will boost trade friction between the two states. Researchers note that such an option would only make sense if "independence is sufficiently trade-destroying that the rest of the UK becomes a less important trade partner for Scotland than the EU", hence Edinburgh's medium-run priority "should be keeping border costs with the rest of the UK as low as possible", the modelling revealed.
"Ultimately the only viable policy option would probably be a separate free floating currency, underpinned by significant foreign exchange reserves", said David Owen, European economist at Jefferies, who conducted a separate analysis.
Bloomberg estimated that Brexit cost the UK economy a whopping $273 billion.
One of the authors of the LSE study, Hanwei Huang, said the economic impact of Brexit would only become clear after 10 to 15 years, but the economic impact of Scotland's independence will take even longer to calculate. He noted that independece will leave Scotland "considerably poorer than staying in the United Kingdom".
A Once-in-a-Generation Opportunity
In 2014, Scotland held a referendum on its independence from the United Kingdom and 55 percent of voters said they wanted to remain part of Britain. The SNP labelled the vote a "once-in-a-generation" opportunity. But two years later Britain had to make a decision on its membership in the European Union and although the country as a whole chose to withdraw from the bloc, 62 percent of Scots voted to remain in the EU. This prompted the SNP to push for a second referendum, often referred to as Indyref2. The party has argued that the country needs another say on independence because circumstances have changed due to Brexit.
Downing Street, however, remains adamant. Prime Minister Boris Johnson has so far refused to allow Edinburgh to hold a second referendum emphasising that Scotland's leaders themselves described it as a "once-in-a-generation" opportunity. Johnson argued that another referendum should not be held for 40 years.
"We don't actually know what the referendum would set out to achieve. We don't know what the point of it would be - what happens to the army, what happens to the Crown, what happens to the pound, what happens to the Foreign Office. Nobody will tell us what it's all meant to be about", the prime minister said last week during a visit to Edinburgh.
What Are Polls Saying?
Public support for independence has increased in recent years and the coronavirus pandemic or rather the handling of it by Scottish leaders has only widened the gap, with Scots praising Nicola Sturgeon's policy. A recent survey commissioned by The Sunday Times revealed that 49 percent of the public want the country to leave the United Kingdom and become an independent state.
Forty-four percent said they want to remain in the UK, while 7 percent were undecided. Previous polls put the number of those supporting the independence over 50 percent.
The SNP said it plans to hold another referendum following the coronavirus pandemic, provided that there is a pro-independence majority in the Scottish parliament. The party said it will "vigorously oppose" any challenge from Downing Street.