Multiple Choice: Indyref#2 and Brexit

With the parliamentary process on the EU Withdrawal Bill reaching its climax, speculation has intensified over when the Article 50 TEU notification will be sent by the Prime Minister. That speculation increased when it was announced that the Prime Minister would address the Commons on the outcome of last week’s European Council on Tuesday rather than the normal Monday statement. Were the Bill to be passed on Monday, that would give Theresa May the green light to announce the triggering of Article 50. However, Downing Street has ruled out a quick triggering of Article 50. While delaying a few more weeks buys the Government time in terms of the two-year negotiation window, it would be highly desirable to avoid a clash between the notification of the UK’s withdrawal from the EU and the meeting of leaders in Rome on 25 March to commemorate 60 years of the Treaty of Rome establishing the original European Economic Community. That gathering will see EU leaders in reflective mood following not just the UK’s referendum but also the European Commission’s recently published White Paper on the Future of Europe. However, a coincidental lobbing of the Brexit grenade wouldn’t do much to get the negotiations rolling on an amicable basis while taking the fizz out of the celebratory prosecco.

An editorial in The Independent counselled against an early triggering of Article 50 on the basis that to do so in the lead up to the Scottish National Party’s Spring conference might force the party’s leader and First Minister Nicola Sturgeon into calling for another independence referendum. But perhaps because the First Minister knew that this might not hinder a Prime Minister that seems intent on doing Brexit her way, and in order to avoid appearing reactive, today, Nicola Sturgeon has thrown her own political grenade by announcing that she will seek another independence referendum to be held in the Autumn of 2018.  This will entail seeking an agreement with the UK government and a section 30 order to authorise the Scottish Parliament to hold such a referendum. The difficulties associated with that process have been set out by Stephen Tierney.

In making her announcement, the First Minister has said that the independence referendum will offer Scottish voters a clear choice for the end of the Brexit process: between a ‘hard Brexit’ with the rest of the UK and an independent Scotland with its own relationship with the EU. However, both sides of that choice may be anything but clear.

On the ‘hard Brexit’ side a great deal depends on how one defines a ‘hard Brexit’ compared to a ‘soft Brexit’. Either you start from the perspective of a single type of soft Brexit, with everything else a variation of hard Brexit (which would then give the Scottish Government a wide scope to depict a number of outcomes as ‘hard Brexit’) or you start with a single model of hard Brexit, with everything else a softening of that position. To take the former approach, one might define soft Brexit simply as an EEA-style association agreement that includes a Customs Union and Single Market participation. To take the latter approach, a ‘no deal’ scenario would be one way of conceiving of a hard Brexit.

In respect of the ‘no deal’ hardest of Brexits, if the weekend papers were rife with gossip about when Article 50 might be triggered, then in more substantive terms their focus was on the report of the House of Commons Foreign Affairs Committee on what happens if there is ‘no deal’ at the end of the process. Together with submissions on behalf of the Bar Council, I gave evidence published in the report on what the risks might be in terms of non-tariff regulatory barriers and the absence of structures for administrative and regulatory cooperation. Although the Prime Minister has said that she would prefer ‘no deal’ to a bad deal, as the report highlights, the absence of a deal may be particularly bad and not simply because of the imposition of tariffs.

So the penalty default of leaving the EU with nothing ought at least to suggest that the hardest of Brexits might be avoided. It just may not be the softest of Brexits in terms of an EEA-style association agreement with the EU to keep the UK in the Single Market and the Customs Union: the preferred option of the Scottish Government as set out in its December 2016 ‘Scotland’s Place in Europe’ (‘SPiE’) White Paper. The point, then, is that Scottish voters may well have different preferences as to the choice between leaving with no deal or leaving with a Deep and Comprehensive Free Trade Agreement: there are choices on the ‘hard Brexit’ side and they would need to be apparent at the point when the referendum was taking place. This may be what is driving the First Minister’s timetable in that if Michel Barnier is right that the window for negotiations is only really 18 months, by October 2018, the shape of Brexit may be much clearer.

Where there is also uncertainty is on the other side of the choice: independence AND not ‘hard Brexit’. The issue of time and timing is again, crucial.

An independence referendum sometime in October 2018 would likely leave only six months until the UK formally left the EU around March/April 2019. If one recalls the first independence referendum, the Scottish Government had claimed that following a vote for independence, it would conduct its independence negotiations over 18 months. At the time, this timetable was regarded as, at best, ambitious and, at worst, merely wishful thinking. But assuming the same timetable, that would mean that – as part of the UK – Scotland would be outside the EU for at least a year and if the UK left without a deal, it would be a very hard Brexit. Indeed, the harder the Brexit the more one might imagine that a vote for independence might come about in the first place. So voting for independence will not, in the short term, necessarily immunise Scotland from the effects of a hard Brexit.

However, it is conceivable that the UK will exit the EU with some sort of deal and with a transitional framework pending negotiation and conclusion of a more comprehensive trade and cooperation deal. Indeed, a transitional framework might very well be useful in persuading an electorate to vote for independence with the buffer that pending that outcome, much will stay the same. Yet there are two difficulties with piggybacking on a holding-pattern UK-EU transitional framework. Firstly, it pegs the timing of independence to the length of the UK-EU transitional framework. So long as Scotland remains inside the UK following an independence vote, the transitional arrangements will apply. If it left the UK, it would have induced its own hard exit. Secondly, it simply begs the question as to what future relationship an independent Scotland would have with the EU.  The ambition is likely to be ultimately for EU membership. It may be that a Scottish government might be able to use a transitional framework to negotiate its way out of the UK but it is not necessarily guaranteed that it could also use that period to negotiate its way into the EU. The synchronicity of the detachment from the UK and attachment to the EU could well be elusive.

A variant of this use of a transitional framework could be to take on board the Scottish’s Government’s idea of a more differentiated Brexit. The argument for a differentiated approach had been premised on Scotland remaining part of the UK but with a different relationship with the EU. In the context of a vote for independence, the suggestion might be that Scotland and the rest of the UK would have different transitional paths in recognition of their different ultimate destinations.  But in essence this would be a crypto-accession process for Scotland while it remained part of the UK and it may be hard enough to get an agreement on a transitional process for the UK as a whole without adding in another level of complexity.

Another option for a Scottish Government would be to pursue a quick entry to EFTA and an early accession to the EFTA-EU EEA Agreement. Albeit falling short of a Customs Union it would give an independent Scotland a trade agreement with the four EFTA states and the trade deals negotiated by them, as well as preferential access to the EU Single Market. The question is whether it would be quicker and easier to negotiate getting into EFTA and the EEA during a transitional period when the UK has left the EU but Scotland is still inside the UK, or whether the same efforts could bring about EU membership at the end of a transitional period.

Given all these uncertainties, it is unhelpful to say that the electorate in Scotland will face a choice between a hard Brexit or independence and much more will need to happen over the next 18 months to clarify what sort of Brexit the UK will get and what sort of future EU/EFTA cooperation an independent Scotland can both seek, and obtain.

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