Regardless of your vote in the EU Referendum, most would agree Brexit will be a challenge to us all. Beyond the tangible and very real challenges of citizens’ rights, currency fluctuation and disentanglement from a union that has helped shape our laws for 40 years, the UK’s decision to leave the EU represents a difficult hypothetical problem for Scottish nationalists.
Having spent the entire campaign for the last “once in a generation” referendum arguing the continuation of the UK’s single market was a key facet of their blueprint for independence, the SNP now have to find a way to argue that the European Union’s single market is more important to Scotland than the UK’s.
This is a particular problem when the Scottish Government’s own figures show that Scotland ‘exports’ four times more to the rest of the UK than we do to the EU.
My own preference would be to keep both single markets but it takes self-delusion borne of nationalist zeal to look at these figures and suggest leaving the UK’s single market in order to stay in the EU’s.
Enter Alex Salmond and Joanna Cherry.
…just remember that Scotland is England’s largest export market, the fact is England exports more to Scotland than it does to the United States of America.
Alex Salmond, BBC Radio 4 Today [LINK, 1:55]
…it’s a little known fact this but… Scotland is actually England’s biggest export destination…
…I think what Mike (Russell) is getting at is the fact that, for us, at the moment the growth market is the EU. Scotland’s exports to the EU are growing.
Joanna Cherry, BBC Daily Politics [LINK]
Essentially, there are two arguments here:
- England exports more to Scotland than anywhere else so of course they won’t do anything to threaten that trade and we’ll continue to do business like we currently do even if independent; and
- Scotland’s exports to the EU are growing so it’s more important to stay with that market.
Each in turn then.
Is Scotland the biggest export destination for rUK?
NB: I have assumed the SNP politicians meant “the rest of the UK (rUK)” rather than “England” here. Primarily because independence would leave the former as the continuating state and, as far as I’m aware, there are no export statistics for England alone. The increase in direct references to England from SNP politicians, as opposed to 2014’s careful reliance on euphemisms such as Westminster, is perhaps a topic for another time.
First thing to note is comparing data is actually quite difficult. Intra-UK statistics on trade are not commonly produced and I’m not aware of any report on UK exports excluding Scotland’s, therefore I’ve had to draw several different sources together to make estimates.
My presumption is that Salmond and Cherry have used the Scottish Government’s Quarterly National Accounts report for the value of rUK ‘exports’ to Scotland [LINK]. This assumption is supported by Cherry quoting £52 billion for last year (Table G).
Further, I presume they have compared this to HMRC’s Overseas Trade Statistics [LINK] which shows UK exports to the USA, our largest single country export destination, as £42 billion for the same year, 2015.
£52 billion is more than £42 billion so Scotland is rUK’s biggest export market, right? Wrong.
Whilst the ScotGov stats cover goods *and services*, OTS only includes the former.
It’s also worth noting UK stats obviously include Scotland’s trade with the US. When these two distorting factors are corrected¹, the comparable data looks very different.
For 2014, the rest of the UK exported £84 billion to the USA. Compared to rUK ‘exports’ to Scotland of £50.5 billion. Over £30 billion more.
So Cherry and Salmond are simply wrong.
But biggest export market or second biggest export market, doesn’t the point remain that no country would volunteer to jeopardise such a valuable market… well perhaps… if you haven’t been paying attention for the last six months.
The 27 countries of the EU account for just under half of the UK’s exports and, as we’ve seen in the last week, the current proposal from Theresa May will see us leave the single market and the customs union, a move which is widely expected to damage trade. To suggest economic logic will prevail simply ignores the depressing reality.
Besides, if the SNP’s argument is that Scotland should be independent to maintain our position within the EU then our trading relationship with rUK will be governed by the agreement between London and Brussels. Whatever argument is made for loss of trade by virtue of a UK-EU border must logically apply whichever side of that border Scotland finds itself on².
And when your trade with one of those entities is worth four times more than the other… well we’ve already seen that economic logic doesn’t matter to nationalists.
What is clear to all is that the UK is a hugely successful, highly integrated single market with billions of pounds worth of trade supporting hundreds of thousands of jobs across the union. Any move to jeopardise this should concern people across the UK.
Are EU exports the ‘growth market’ for Scotland?
Short answer… no.
The latest Scottish Government export statistics [LINK] show Scottish exports to the EU fell by 7.8% from 2013 to 2014; meanwhile our exports to the rest of the UK grew by 3.2% across the same period.
Given Joanna Cherry specifically mentioned, twice, that our EU exports are growing I thought perhaps she was referring to a longer timescale. The Scottish Government’s export statistics go back as far as 2002. This is the growth they show for rUK and EU trade from Scotland³ (goods and services).
Clearly over the time period covered by ESS, our exports to rUK have grown far more than those to the EU. Indeed, the only possible way by which you could argue the EU is the ‘growth market’ is to compare 2014’s figures against 2010’s which would helpfully include a bumper increase for the EU in 2011.
New ESS figures are out this week so perhaps Ms Cherry has had a sneak preview of the report and knows it will show an annual increase of EU exports exceeding that for rUK trade? Aside from questions this would raise on improper leaking of civil service reports to the governing party, would a one-year increase really constitute the definition of a “growth market”.
Even so, assuming rUK trade wouldn’t change at all, it would take 15 years of 10% faster growth for EU exports to reach parity. And for what?
The SNP have a problem. In 2014, in an attempt to hoodwink people into a “minimal change” prospectus for independence, they committed themselves to the importance of the UK’s single market. By virtue of mutual membership of the EU and a sterling currency union, trade with England would continue unabated.
Now, Brexit has simultaneously offered the nationalists a strong emotional argument for separation whilst potentially torpedoing an economic case that was already fundamentally flawed.
It is simply illogical to claim Scotland needs independence to ensure a UK-EU border doesn’t damage our trade with the European Union, whilst denying the very same border would damage our much more valuable trade with the UK were we to find ourselves on the other side of it.
In other words, if we end up with a “hard Brexit” that is damaging to the UK, and therefore Scotland, then by definition independence would take a similarly “hard” format. Whilst I’d happily agree with the SNP in arguing against a “hard Brexit”, I won’t join them in simultaneously backing a far more damaging “hard independence”.
Politicians will, of course, spin the data to suit their position but we’d all hope the data enjoyed some relationship with the truth. Sadly Mr Salmond, whilst humbly declaring he was “delighted to introduce some facts to the BBC”, simply made up his own.
¹ Note on sources and producing the comparable data.
Scottish Government Quarterly National Accounts Table G [LINK] provides the data for rUK ‘exports’ to Scotland.
For rUK exports to the USA, the value of goods and services are taken from Table 9 of the UK Balance of Payments Pink Book [LINK], with the value of Scotland’s contribution to these UK exports to the US taken from Export Statistics Scotland [LINK]. Note that I have therefore used 2014 as the last available year for which there is data in all sources.
(£87983m – £3985m = £83998m)
² Which is why the SNP will shortly pivot towards joining the EEA / EFTA as their proposal for independence.
³ Worth noting that ESS does not include oil and gas exports. Given the volatility in the value of those exports, it seems sensible to gauge market growth without them. For info, in 2014 Scotland exported £8.3bn of oil and gas to rUK and £11.2bn to the rest of the world (no record of exports specifically to the EU).
⁴ I have contacted both Joanna Cherry and Alex Salmond, as well as SNP Press Officer Tom French, on twitter to enquire as to the source of the figures. I have had no responses so far.
I have emailed Alex Salmond’s MP office asking the same and Alastair Cameron of Scotland in Union has contacted Joanna Cherry’s office.
If there are any responses provided I will update this blog.