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by Brian MonteithThe Scotsman, Monday 23rd January 2017

The First Minister is caught in her own Groundhog Day. She goes to bed every night hoping that tomorrow will be different, but every morning she wakens up to find we are still leaving the European Union.

How often does the First Minister have to set her alarm clock before she realises that the only way to be released from her nightmare is to seek redemption by accepting the truth; more of the Scottish electorate voted to stay in the UK than voted to stay in the EU?

Only then will she find she is released from the curse of her own intemperate and Pavlovian responses and at last free to spend time on her day job of saving education and helping Scotland’s stagnating economy to grow.

The Prime Minister had told us on Tuesday that the UK will not seek to remain in the EU’s single market or its customs union but will instead look to agree a new trade deal that goes as far as possible to ensure there is little lost by our departure from them. The price? Only the saving of over £10 billion a year, control over our laws, taxes and borders together with the ability to strike free trade deals with the rest of the world where the real economic growth is.

The question for the increasingly marginalised and irrelevant First Minister is what does she do now? Does she just demand a second independence referendum irrespective of the dire consequences to her party and the independence movement? Theresa May might just agree to one under the condition it is held after the Brexit negotiations are completed, which would be a reasonable caveat that Scots could be expected to see the sense in.

Or does she continue the wholly negative murmuring campaign that a second referendum is still on the table when she can see it is undermining business confidence and damaging the Scottish economy?

If, as she says, it is not right to hold a referendum in 2017 then why should it become right in 2018 – as Alex Salmond claims – when the Brexit negotiations will only be half completed at best? It is not as if the EU’s single market is worth the constant political humiliation. Without trying too hard I can think of at least a dozen reasons Scotland would be better off outside the single market and instead simply trading with it like normal countries around the world.

Firstly, there is no EU single market in Scotland’s most important industry, financial services. Regulatory and tax threats to financial services emanating from the EU will not just hit the City but Scottish financial services too.

Secondly, the EU single market is not complete, it is a sham. One manufacturer pointed out to me how it was easier to export to the United States through only its Federal 
Drug Administration but it faced 27 such bureaus when exporting to the EU.

Next, you do not have to be in the single market to trade with it, which is what the US, China and Japan do – but being outside it allows you to trade on better terms with the rest of the world – where the real growth is.

Research by banking consultant Bob Lyddon has demonstrated that the UK loses £10bn in Corporation Tax revenues to Ireland and Luxembourg because of legal tax avoidance schemes that are only possible from inside the single market. Scotland’s share is that lost revenue is £1.0bn.

Furthermore, the same single market dodges mean the UK loses business turnover, investment and high value jobs also worth £10bn – meaning a lower GDP, lower output per capita and less personal and consumption taxes which Scotland would also share in.

Then there’s the Netherlands model of tax dodging within the single market whereby shell companies fly under a Dutch flag of convenience to ship their profits out of the EU to places such as the Dutch Antilles where taxes are negligible.

The branch offices of multinationals are located in Dutch cities using well-rewarded local lawyers, bringing investment, conspicuous consumption and tax revenues to the cost of the UK, and Scotland. Only being outside the single market can end this scam.

Did you know the UK has liabilities to EU financial institutions of £1.1 trillion and can only be released from these if it leaves all EU institutions including the Single Market? Scotland’s share of those liabilities is £110bn – how would Nicola Sturgeon propose to underwrite those, whether Scotland is inside or outside the UK but inside the single market?

Do you want to reduce red tape? Fewer than 10 per cent of Scotland’s 362,000 businesses export to the EU single market but all 100 per cent are subject to its laws and regulations. That too would end.

Customs Duties paid on imports from the rest of the world accounted for £3.1bn last year but are sent directly to the EU less a 25 per cent agency fee the Treasury keeps. After leaving the single market the whole £3.1bn would come to the UK with the nominal Scottish share being £310m.

Without leaving the single market Scotland cannot plan an immigration policy that attracts the best skilled people by treating everyone equally irrespective of which country they come from; nor be accountable for its own laws through being outside the jurisdiction of the European Court of Justice; or share in the saving of £10bn in net payments to the EU.

The UK and Scotland’s future is with the growing markets – by 2050 UN demographic projections show behind the EU’s tariff barrier there will be 54 million fewer working age people while beyond it the Commonwealth alone will have 825 million more. Go figure.

Then there’s the world’s poorest African and Asian countries we could now trade with, ending their poverty caused by EU customs duties. That’s a moral as well as an economic reason, making fourteen for starters.

Last week a YouGov poll showed that following her speech a majority of Scots backed Theresa May’s approach to leave the single market and Customs union, control immigration and keep the Irish common travel area. Nicola sturgeon should take note, or tomorrow and forever she will be trapped in her Groundhog Day from being unable to accept reality.

For the published article and comments please go here.