Softer Brexit? Should we be looking north?

David Worsfold

The language of the political debate around Brexit has suddenly become more nuanced, maybe pointing towards a softer Brexit, even retaining some access to the single market.

Brexit Secretary David Davis’s unexpected announcement in the House of Commons last week that the UK could in some way pay to stay in the single market took people by surprise. Despite the lack of detail, the change in sentiment that it represents has been cautiously welcomed in the City and the financial services sector, where any retreat from the cliff-edge of a hard Brexit is always going to be taken as good news.

If those insurers, pension funds, asset managers and advisers struggling to re-shape their business models in the midst of all this uncertainty want another option to ponder, perhaps Scotland might be the answer. Certainly, the Scottish National Party wants you to think seriously about it.

At a briefing for European journalists last week, Alex Salmond, the SNP’s former leader and International Affairs spokesman, and Stephen Gethins, their Europe spokesman, set out the scenarios they believed could see Scotland remaining part of the single market even if the rest of the UK finds itself outside.

It isn’t as far-fetched as it sounds.

What was absolutely clear listening to them was the very clear focus the SNP has on maintaining access to the single market for Scotland: “The single market is very important to the economy and to businesses in Scotland. We see maintaining access to it as absolutely paramount”, said Gethins, adding that they also welcomed the free movement of people.

“The key to this is economics”, said Salmond. “The best option for Scotland is to be part of the single market and the European Economic Area”. And it is the EEA that most interests the SNP.

The scenarios are complicated, not least because the UK government’s position is far from clear, said Gethins, who couldn’t resist a reference to the story in that day’s headlines: “The UK government isn’t any further forward that those scribbled notes”.

The SNP’s starting position is that Scotland is currently in the single market and in the EEA, so how does it preserve one or both?

Clearly one option, said Salmond, is that if the UK is heading for a hard Brexit in March 2019, it could hold a second independence referendum sometime in the autumn of 2018. If – and judging by the opinion polls it is a big if – that delivered the Scottish government a mandate for independence, it would quickly approach the European Union about preserving access to the single market while the details of the future relationship with the EU were hammered out.

Both Gethins and Salmond were predictably dismissive of the various hurdles in the way of an independent Scotland joining the EU but they did accept it might take time: “If it does take time, then the EEA isn’t a bad waiting room for us to be in”, said Salmond. Back to the EEA again.

Of course, there is a looming legal question over the UK’s membership of the EEA as the referendum was silent on the country’s future relationship with the EEA and the SNP seems certain to make the most of this. However, the SNP and the Scottish government it controls, has a fall back position should the UK decide to leave the EEA as well, which is the most likely option, and that is to join the European Free Trade Association.

EFTA has almost dropped off our radar screens since the days when the UK was one of the founder members in 1960 – we resigned when we joined the European Economic Community in 1973. It now has only four members – Switzerland, Iceland, Liechtenstein and Norway – but through EFTA’s relationship with the EEA, they all have access to the EU single market.

Could a non-independent Scotland join EFTA? According to Salmond, it could: “EFTA membership only requires you to be a state but not a sovereign state”.

He acknowledged that even without independence, a move in this direction would require the sort of powers promised under the “DevoMax” formula to be devolved to the Scottish government. That might be an attractive option to a UK government wanting to preserve the Union, he argued. He also argued that it would do away with fears over the need for a hard border – also a potential solution for Northern Ireland in his eyes – as Norway has a long land boarder with Sweden and manages. It would means controlling immigration into England at the point of employment and not at a border, an option that might not appeal to businesses in England.

This might sound all rather fanciful, but what it does show is how carefully the SNP has thought through its strategy as the complex Brexit negotiations unfold. It wants to keep businesses and financial institutions in Scotland with access to the single market. It is not beyond the realms of possibility that the UK government might let this happen in order to remove a major hurdle to Brexit – the potential entrenched opposition of the Scottish government – and to head off the threat of Scottish independence.


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