On Surprises, Strategy, the Economy and What Comes Next for Scottish Independence

Surprise events can knock even seemingly resilient organisations off course, undermining their strategy such that they can take years to recover, if they do at all. The crisis that engulfed the Scottish National Party (SNP) after its leader and Scottish First Minister, Nicola Sturgeon, resigned in February 2023 has hallmarks of the kind of strategic surprise that can be fatal for organisations.

The party lost its leader of eight years and a multiple election winner while the party bureaucracy lost numerous high-profile figures in quick succession. In addition, a police investigation into the party’s finances which saw the arrests of Sturgeon, SNP chief executive Peter Murrell, and the party’s Treasurer, alongside declining poll ratings, have all dogged the SNP leadership.

Despite events since Sturgeon’s resignation, several fundamentals of the constitutional debate remain unchanged. One, however, is much less discussed, yet possibly the most important of all: how resilient are the UK’s existing governance institutions given consistent long-term economic decline, and the extreme levels of territorial inequality prioritising London and South East England?

An Economic Case for Independence?

Perhaps the most significant failing of the SNP, and the wider Yes movement, has been to cede the narrative about what exactly the ‘economic case for independence’ is to its opponents. Two issues—the currency an independent Scotland would adopt and the fiscal starting point of the new state—have come to be the economic case for independence in media eyes and hence in most public debate.

Challenging though these issues might be, the economic case for independence (or Union, for that matter) encompasses much more. The key to recasting the economic case for independence would appear to be to move public debate onto economic inequality – and what can be done about it. In short, recasting the ‘economic case for independence’ to focus on the economic sustainability of the UK is where the potential for a possibly decisive strategic surprise in Scottish constitutional politics resides. The potential surprise is that it might be the economic case for the Union that is on life support.

Britain is dead…?

In 2014, as now, the ‘economic case for independence’ has been framed explicitly by the notion that an independent Scotland might be (substantially) poorer than the UK. However, implicitly by this narrative, the UK is a rich and prosperous country and therefore a safe bet. But this bet might be off if public perception decides that Britain isn’t quite so rich after all. Whilst Scotland might have higher public spending than the English regions thanks to Barnett, it is often fairly close to the UK average on a range of economic metrics, including gross value added (GVA) per capita and productivity.

In 2022, Philip McCann wrote in polite understatement that ‘the UK’s endemic regional-national productivity problems cannot be addressed by the UK’s current institutional and governance set-up’. McCann and colleagues’ most recent work has demonstrated that the lasting impact of the 2008 financial crisis was to refocus development in London. Meanwhile, economic inequality between regions is growing rather than shrinking, which means that some regions are most likely already poorer than former Eastern Bloc countries.

Arguments that some of the UK’s economic regions might be poorer than the 2004 EU accession countries have been made for some time. To hear the Leader of the Opposition make a major speech agreeing that the UK as a whole might be less well off than Poland by 2030—a country that suffered wartime devastation, almost fifty years of communism and a period of martial law in living memory—signals the gravity of the situation.

The question, though, is what exactly can be done. The last time Britain faced this bad a strategic economic outlook, it saved itself by joining the EEC and discovering North Sea oil, the ironies therein being somewhat obvious given current circumstances. Even if a Labour Government elected in 2024 changes British economic trajectory, such are the medium- and long-term trends on productivity, capital investment, and the hard-wired institutional opposition to genuinely meaningful structural change to the governance of the UK economy, that this increasingly appears to be a long shot.

Which surprise is coming?

Surprises are, well, surprises, meaning they can come at any time and make unlikely outcomes seem likely in retrospect. If better economic performance does not manifest itself quickly—and Labour will have at most twenty-four months before the next Scottish Parliament election to deal with high inflation, interest rates, and deepening mortgage pain — then the debate might turn out to be quite different.

Again, McCann is telling on this issue. In 2019, he wrote that ‘major differences in local productivity are a primary source of the geography of discontent and they are also a challenge to a country’s institutional and governance structures.’ This is exactly where the potential for a strategic surprise to the UK lies, but only if the Yes side can mobilise discontent such that it becomes renewed support for constitutional change. If a strategic surprise occurs such that Scottish public opinion changes so that staying in the UK does not represent the safer option economically, then the terrain on which a referendum would be fought would be utterly transformed.

The critical question for the Yes side is, therefore: what might trigger a strategic surprise whereby the perilous economic state of the UK comes to the forefront and disrupts the constitutional debate in Scotland sufficiently for a majority to vote for independence? Possible, but less likely in the medium term, are concrete moves for the UK to rejoin the European Union, or a vote for a united Ireland. If either of these did occur, then there would be a very substantial shock to the independence debate. All these potential surprises are in plain sight and if one or more of them comes to fruition then the constitutional debate could shift very rapidly indeed.