By Timothy Spyrou
WHEN the Scottish National Party claims that Scotland’s interests aren’t properly represented in the EU, I am puzzled. Britain has two financial service clusters, an oddity for any country, regardless of size. One is the City of London; the other, Edinburgh. Together, they are the most integrated financial centres in the world. When the observer takes into account that both cities have vibrant legal and consulting sectors to complement their financial services, he realises that Great Britain has the tools to remain a competitive economic giant.
If Scotland leaves Britain, then you will have two countries lobbying for the same vital interests rather than one state defending its financial services industry from EU over-regulation. If RBS and Lloyds leave Scotland in the event of independence, Scotland will have less clout in the EU, provided it gets in. Although both Edinburgh and the City deserve criticism for their part in the Great Recession and aftermath, it can’t be denied the two British financial centres are powerful growth engines.
The markets of the world prefer Britain over Frankfurt, Dubai, Hong Kong, Singapore and even mighty New York for this reason. It appears absurd that England and Scotland will together abandon 300 years of a dynamic and diverse financial scene within one UK by walking away from each other. Together, they can easily adapt to the pace of changing economic circumstances.
It is argued that both London and Edinburgh need to rein in and re-orient their financial services away from dodgy financial instruments; they are probably correct. It is time to return social conscience and enlightened self-interest into banking; otherwise we will always be at risk of devastating financial crises. It should be noted that Britain has too much of the Wall Street mentality and too little of the venture capital spirit of Silicon Valley. Britain can also benefit by adopting some elements of German long term planning in lieu of short-termism.
By achieving the appropriate balance of policies, the UK can retain and enhance its financial services competitiveness within the European and global economies. By pooling shared knowledge and networks to adapt together within one UK in Europe, rather than splitting apart, they can withstand challenges from European partners.
Simultaneously, it is argued that Britain must regain its ability to participate in the innovative and engineering economies to compete in today’s world. It is clear that, as long as Britain remains a united member of the EU, the respective interests of Scotland and England in these areas can be enhanced. Despite decades of de-industrialisation, Britain still has the tools needed to merge the new digital age with the old world of engineering so it can be a potent economic power and exporter.
It may never surpass Germany’s Siemens or America’s General Electric, but that does not mean Britain should not try to compete with the German Mittelstand. However, for England, Scotland, Wales and Northern Ireland to explore their full exporting potential, they need open markets and need to ensure the playing field is fair, without barriers to entry.
Despite being the foundation of the EU, the Single Market is always at risk of being undermined by member states that adopt economically nationalist positions which weakens competition within the bloc. Scottish and British interests, jobs and wealth can best be protected under one Union within Europe.
Why weaken British companies like Rolls-Royce, BAE Systems, Weir, and others when they are up against the might of German economic power? Why not stay together under one guardian and, united, become more nimble and create niche markets? Why not remain part of the largest common market in the world, and have Scottish and English business interests represented at world trade talks so they can access global markets from America to Brazil to South Korea?
Britain needs to stay in Europe so it can also play a decisive role leading international negotiations. Europe needs a strong, undivided United Kingdom to build up comprehensive clean energy policies and climate change adaptation strategies on an EU level. If Scotland, England, Wales and Northern Ireland remain a United Kingdom, they will have a lot more clout within the EU on this vital issue.
The technological, scientific and financial capital that an undivided Britain will retain is immense. The right mixture of policies could ensure that it will carry the same clout as Germany and France when it comes to actually taking constructive action in building up a European Single Market in energy production and distribution.
Given that Europe’s energy security is a transatlantic issue, America would probably take British advice and expertise on the matter more seriously. A smaller, less influential Britain and a small Scotland, even if they coordinate their efforts and remain EU members, will not be able to guarantee the best deal for their energy industries and their constituents vis-a-vi the European partners.
Germany’s position as the undisputed leader of Europe will be greatly consolidated, and it will be up to Germany what sort of roles a smaller Britain and an independent Scotland will play regarding a single European energy security policy. The situation will leave France much stronger in relation to a Britain that has been split in two. The French, who are more protectionist, will be able to push their interests far beyond what would be possible than if the UK stayed together and continued to be an economically liberalising counterweight.
A whole United Kingdom within Europe can engage strategically to ensure it will not only have a key role in protecting the energy security of the West, but will benefit from increased growth and jobs that such a grand bargain could bring.
Lastly, it should be noted that many of the supposed ideological differences between a Scotland and Wales that leans social democratic and an England that is often conservative, are shallower than they appear. Almost all Western societies are struggling to make a mark for themselves in the knowledge economy and the age of globalisation. The discontent within society in response to a marked increase in inequality of opportunity is not just a Scottish problem, or even a British problem. It will not be solved by breaking the United Kingdom in two.
A major Western power breaking itself up into two may find that her two separate, but previously well integrated nations cannot achieve the security needed to flourish in the new age. United, they can secure not only their interests in Europe and the wider world; they can secure the interests of Europe and the world.
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