(VOVworld)- More than 4 million Scottish voters will vote Thursday on whether Scotland should stay in the UK or become an independent nation. If more than 50% of the voters vote for Scottish independence, an independent country of 5.3 million people will be formed. Whether Scotland will become more prosperous separated from the UK is unknown but some consequences are foreseeable.
Scotland is located in the north of the UK. It covers an area of nearly 79,000 square kilometers, equivalent to one third of the UK. Scotland has 5.3 million people, of whom 80% are Scots. Scotland’s revenues come mainly from North Sea oil and gas. Scotland contributes about 10% of the UK’s GDP.
Historical ties and separation motives
In the 17th century, England and Scotland were politically independent. In 1707 the Act of Union unified the two forming the United Kingdom of Great Britain and Northern Ireland. Not all Scots were happy with unification. Over the years, Scotland has more than once threatened to leave the UK. After the 1999 financial crisis in Europe, Scotland set up its own Parliament but all financial decisions were still made by the UK. In 2011 the Scottish Nationalist Party demanded independent control of the Scottish Parliament, sparking a number of movements demanding Scottish independence. In October, 2012, British Prime Minister David Cameron and the Governor of Scotland agreed to conduct a referendum on the matter.
According to recent public polls, sentiments pro and con are approximately equal. According to independence supporters, Scotland’s separation from the UK will help it become economically self-reliant by managing revenues from its oil without sharing them with London. Opponents say separation would threaten Scotland’s economy.
Impacts on European unification
If the pro-independence voters win, Scotland will declare independence from the UK on March 24, 2016. This means the two sides will have more than a year to discuss tough issues like public debt, currencies, and border control. The Scottish government will need to create its own Constitution and negotiate to join NATO and the EU.
Many analysts say Scotland will have to pay for independence. It will have to face instability in interest rates, taxes, investor protections, and monetary policies. Scotland’s budget deficit is forecast to be at least 6.4% of GDP. Separation will force Scotland to stop using the pound sterling because political parties in the UK will oppose it. Without a currency union, Scotland’s use of the pound sterling would violate the law in the European Union. British Prime Minister David Cameron warned that Scotland’s independence will not be a trial separation but a painful break-up from which there will be no way back and the United Kingdom will end its 300-year-old union.
A separation will also affect the security and prosperity of the EU and undermine the UK’s prestige at a time when the EU economy has just recovered from recession and the UK, Germany and France are the pillars of EU trade.
Foreseeable risks
Though the result is not yet known, negative reactions in the market have been already reported. The pound sterling has devalued dramatically against the US dollar to its lowest level in 10 months. The share prices of two major Scottish banks have fallen sharply on the European securities exchange. The Royal Bank of Scotland and Lloyds have threatened to move their headquarters out of Scotland if separation occurs. Independence supporters and opponents have conducted demonstrations all across Scotland in the past few days.
What will Scotland be like after separation? The answer is unclear but it is certain that a separation will seriously impact global markets and encourage other separatist movements within the EU, which have sprouted in Spain and Belgium. The Scots need to be careful about their decision and carefully weigh the benefits and costs.