The Scottish Play

I haven’t mentioned the vote on Scottish independence yet. It’s big news here—scarcely an hourly newscast passes without at least five minutes and sometimes much more being devoted to the subject.

As is my practice I don’t want to intrude in other countries’ political affairs. IMO Scottish independence is an issue to be worked out between the Scots and the English.

I would note parenthetically that I have heard no commentary whatever on the implications of not being a monetary sovereign. It’s pretty obvious that the large nominally Scottish banks are aware of the issue:

Scotland’s Yes campaign has been dealt a significant blow after Lloyds and RBS threatened to move headquarters operations to London if the country quits the Union.

The banks, which employ a total of 27,500 in Scotland, confirmed they would register themselves in England if voters opt for independence next week.

And the department store giant John Lewis warned that shoppers in Scotland could expect higher prices if it votes for independence because retailers would no longer be willing to absorb the higher cost of trading there across the UK.

It moves the referendum battleground to matters of the “head” and the country’s crucial financial services sector, which generates around £7-9bn each year and employs 100,000.

It’s difficult to ferret out the statistics to get a decent handle on the character of Scotland’s trade. I know that the U. S. is its largest single foreign trading partner, if taken as a whole the EU is its largest single foreign trading partner, and that because of present free trade between Scotland and the balance of the United Kingdom it’s a bit difficult to nail down the volume of that trade.

The prevailing wind seems to be blowing in the direction of retaining the pound if the independence vote passes. Is that the right move?

Emotions are running very high on this subject on both sides and I strongly suspect that the ultimate decisions will be made emotionally. That doesn’t negate the many practical considerations that should be taken into account.

From the U. S. point of view I think that Scottish independence would be a bad development. Not only would it weaken the United Kingdom, one of only two NATO members other than the U. S. at the highest level of military force readiness, should it elect to join NATO it would be yet another free rider that was not pulling its weight in the alliance.