Brexit is almost certain to lead to Brexplosion
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Brexit is almost certain to lead to Brexplosion

Scotland

Even if the terms of the UK’s exit from the European Union are tied up soon, market volatility will remain high — with a second referendum on Scottish independence almost a certainty. And this time, a vote to leave the UK is highly likely.

While the UK voted to leave the EU by the slimmest of margins — 51.9% to 48.1% — in Scotland the margin of victory was much higher — and for the other side. Some 62% of people in Scotland voted to remain part of the EU.

The pro-independence Scottish National Party, the dominant party in both Scottish seats in the UK parliament and in the Scottish parliament, has already suggested a second independence referendum could take place. Leader Nicola Sturgeon said on June 24 that such an event is “highly likely”.

It would be hard for anti-independence voices to object. The first independence poll in 2014 was to be a “once in a generation” affair, according to parties on both sides of the argument, but the SNP always said another would be necessary if there was a material change in circumstances.

There are growing hopes that, through various constitutional mechanisms and political manoeuvring, a Brexit might not be a foregone conclusion. But if there is, that would most definitely constitute a material change for the SNP.

The Nationalists’ democratic mandate for another referendum is also firm — aside from being bolstered by Scotland’s strong support for the Remain campaign in the EU referendum, the SNP took all but three of Scotland’s 59 Westminster seats at the UK’s 2015 general election. It also took 63 of 129 seats at this year’s Scottish parliamentary election, making it the largest party, although it lost the overall majority it enjoyed during the previous parliament.

So, barring a last minute ‘Breversal’ — where some of the hopes of the Remain campaign come true and the UK avoids an EU exit — little stands in the way of another Scottish independence referendum.

And Brexit is likely to be the biggest factor in that referendum returning a vote for independence.

During the 2014 referendum, much was made of the fact that Scotland would have to leave the EU if it voted for independence, and then reapply. The reapplication would face opposition from countries like Spain, said anti-independence campaigners, that are worried about separatist movements within their own borders.

Whether or not that would have been true at the time, it is surely no longer an issue. Spanish authorities — and those at the EU level — will likely be far more worried about the potential for Brexit to bolster anti-EU sentiment in other countries. If Scotland voted to leave the UK then applied to join the EU (or maintained the UK’s EU membership while the rest of the UK left under some constitutional sleight of hand) it is unlikely that it would be refused — after all, what message would that send out amid an existential crisis for the EU?

On the other hand, another major argument during the last independence debate has also shifted — the price of oil. The SNP’s argument had long been that Scotland’s oil wealth would let it prosper as an independent nation. With the plunge in oil prices over the last year, it would require some very creative mathematics to again make that argument.

But that may not matter. As the EU referendum has shown, voters are increasingly likely to vote with their hearts and not their heads; on matters of identity, not finance.

Whether Scottish identity will in future include a British element or a European one will be decided in the voting booths. And now that markets know how unpredictable voters can now be, volatility won’t just rear its head in the last few weeks of campaigning as it did during the last two referendums. This time, expect turbulent conditions the whole way through.

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