THE referendum in 2014 transformed independence from little more than a romantic dream into the critical fault line in Scotland’s politics. Hopes that the Brexit vote would provide a springboard for a second independence referendum floundered as SNP voters stayed away from the polls at the 2017 General Election, while the Conservatives garnered much more of the Unionist vote. The two sides have now settled into a war of attrition, with neither being able to build a larger coalition of support.

Assume that this continues, and that the UK and Scottish governments again agree the terms of an independence referendum. There is no guarantee that campaigning will cause a shift in people’s thinking. It’s perfectly possible that a first minister will lead a losing campaign, and feel compelled to join Alex Salmond and David Cameron in resigning after an abrupt, public rejection.

As I have written about politicians’ career-defining errors, it’s become very clear that in all cases there is a common element: a lack of flexibility in thought and action. Margaret Thatcher adhered to the principles of a very specific approach to economics. John Major stuck rigidly to economic advice. Gordon Brown ended up in thrall to bankers, even as they crashed the economy. Salmond – often his own economic adviser – ended up sounding convinced that black was white, and up was down.

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All successful politicians in a democracy shape political reality. But if they set their faces against reality, sooner or later it will flatten them.

As we prepare for a second Scottish independence referendum, Cameron’s failure to win the Brexit referendum is the most instructive.

Cameron had just spent 10 years getting the better of very conventional politicians, gradually expanding his control of the political centre ground. In the EU referendum, he did the equivalent of throwing a bit of red meat to a grizzly bear. Instead of wandering away contented, the Brexiteers demanded more. Much more.

There is a risk that the currency question will be important in our second independence referendum. Let’s assume the Scottish Government’s position will be that sterling is Scotland’s currency, and there is nothing that the UK can do to stop an independent Scotland using it.

I can predict the UK Treasury’s withering critique. It will be unable to find any precedent for such a large economy as Scotland’s piggy-backing on another country’s currency. It will claim derisively that using sterling will make Scotland’s central bank barely worthy of the name.

Pointing to the Scottish Government’s inability to use monetary policy, or provide liquidity for financial markets, it will claim that Scottish financial institutions operating in the UK could be as unstable as the Icelandic banks in the financial crisis.

By advising the UK Government that without Scotland agreeing to the Bank of England’s continuing involvement in the regulation of Scottish firms, they should not be able to operate in the continuing UK, the Treasury will breathe life into a renewed Project Fear, while playing on tensions in the Yes movement.

I can imagine the Scottish Government arguing that it will be necessary to co-ordinate regulatory arrangements between the countries after independence. The Scottish regulator would adopt the Bank of England rule book initially, so that Scottish firms could continue to operate in England.

MORE radical voices in the independence movement will claim independence requires the almost immediate launch of a Scottish currency. Co-ordinating regulation with the continuing UK would be a starting point, until Scottish regulation, suitable for entering the European Economic Area was in place.

All of this will hide fundamental disagreements about the future of the financial services sector. Scotland has many large asset management firms, which serve customers across the UK.

Keeping the pound, and relying on wholesale adoption of the Bank of England rule book would be an attempt to reassure the financial sector that independence would mean business as usual. That risks being a “feed the bear” strategy. Like Cameron, if the Scottish Government does this, then it will risk appeasing political opponents, while giving less than it might to its natural supporters. This could easily foster modest divisions within the Yes movement, which will provide new ways for the No campaign to spread its messages of doubt.

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In a hard-fought referendum, we might expect the No campaign to rely on carefully targeted social media marketing. It will have much more money than the Yes campaign, and it will be able to look to powerful interests which will feel threatened by Scottish sovereignty – and that could very easily include working in the financial sector.

The new Project Fear will simply target people who are doing well at the moment. It may be complete nonsense, but for enough people in Scotland, threatening them with job losses, it could be effective enough. It will build on Ruth Davidson’s insight that opposing a second referendum was all that was required to be second best in Scottish politics, and the increasing willingness of instinctive Unionists to vote for the SNP’s strongest opponents in parliamentary elections.

It will be targeted at undecided voters, insinuating that there is just too much risk in voting for independence. And it will be ruthlessly efficient in turning doubt into voting intentions – deploying higher turnout among its supporters as the last bulwark against independence.