Scotland's economy can thrive after independence, Downing Street adviser admits

A blog post co-authored by Geoffrey Chapman, who advises the Department for International Trade on economics, examines the financial viability of a Yes vote and sketches out ways an independent Scotland could achieve international recognition even if Westminster refuses to accept the result of a referendum.

The Scottish Government has pledged to hold a second independence referendum if a pro-Yes majority is returned to Holyrood in May’s election. Yet Boris Johnson has vowed to reject any demands for a Section 30 order, which would grant Scottish ministers powers to hold a legally binding vote.

Chapman’s article, published this week on the London School of Economics (LSE) British Politics and Policy blog, notes that if Westminster’s consent is not forthcoming, Scotland could “attempt unilateral secession from the UK, which would arguably flout constitutional law and make the applicable international law more relevant”.

It continues: “At present, Scotland satisfies all the international legal criteria for statehood, with one exception: it lacks the formal authority to enter into foreign relations, even though it has the literal ability to do so. Consequently, if Scotland demonstrated independence from UK authority in the course of conducting international relations, Scotland would be more likely recognised as a state by other states and international organisations.

“Furthermore, if voting at the UN General Assembly is anything to go by, we see no immediate reasons why other states would side with a UK position (assuming it opposed secession).”

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The blog post – co-authored with Richard Mackenzie-Gray Scott of the British Institute of International and Comparative Law – adds that Holyrood need not rely on the goodwill of Westminster to become a prosperous independent nation.

It reads: “The rule of law should be at the heart of any Scottish secession to allow for the best possible economic outcomes for people in Scotland and the UK. Such a process also depends on the politics between the UK and Scottish governments being cooperative, open-minded, and transparent.

“Nevertheless, although political amicability between the UK and Scotland is preferable, it is not indispensable for Scotland to become independent and continue prospering thereafter, particularly if Scotland negotiates access to the EU single market.”

On the economic impact of independence, the article looks at the historical example of the Slovak Republic and Czech Republic’s “Velvet Divorce”. It found that both countries managed to grow real GDP per capita despite higher trade costs, and states Scotland will be able to do likewise.

“Scotland’s historic economic performance has been strong, which bodes well for a small, open and independent Scotland,” the article explains. “With modest population growth alongside good GDP growth, supported by stable participation in international trade, it seems Scotland is in a far better initial condition than either the Czech or Slovak Republics, and can therefore expect similar (if not better) post-independence outcomes.”

It concludes: “Considering Scotland has all the necessary machinery in place to become an independent state, we see no obvious reasons why Scotland would not succeed economically if it were to do so, especially if achieved within the bounds of the law.

“Although our findings might be controversial to some, we hope to show that Scottish independence, while not inevitable, is far more nuanced a matter than many have claimed. There exist several options worth pursuing for the parties to this debate.”

Pro-independence politicians hailed the report as further proof of Scotland’s potential as an independent nation.

SNP depute leader Keith Brown told The National: "This report, co-authored by a UK Government adviser, concludes that Scotland has everything needed to be economically successful as an independent country.

"But what it shows is that we need the powers of independence to make the most of our huge potential – and that means being back in the European single market, which is seven times bigger than the UK and which has been crucial to some of our most important exports, after being dragged out of the EU against our will by Boris Johnson.”

Scottish Greens co-leader Lorna Slater added: "This analysis clearly shows Scotland's exports to the EU have grown faster than the rest of the UK's and stand us in good place to reforge that relationship after independence. But if Scotland is to flourish as a new nation we can't just create a little Britain with centralised power, a broken democracy and a reliance on fossil fuels.

“We need to invest and grow our economy in ways which we could lead Europe in tackling the climate emergency, like renewable energy.”

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Yet UK Government ministers have long argued that independence would be disastrous for Scotland's economy. In February, Brexiteer Cabinet Office minister Michael Gove promoted the results of an LSE study which claimed independence would hit the Scottish economy even harder than Brexit has.

The Scottish Government disputed those findings, arguing researchers had not considered all the effects of independence, such as changes in investment flows, fiscal arrangements or currency.

A UK Government spokesperson said: "This is not the view of the Department for International Trade or the UK Government, and the matter is being looked into."