Scottish First Minister Nicola Sturgeon’s political fight for another independence referendum might just be a prelude to the economic one lying ahead.
Scotland backed remaining in the U.K. by 55 percent to 45 percent in September 2014 and much of the argument on both sides focused on the economy, future currency and public finances of a new state versus the stability of keeping things as they were. Figures show that growth and the budget deficit since have deteriorated along with the oil price, but Britain’s plan to leave the European Union means the status quo is no longer on offer.
Here is the state of Scotland’s $200 billion economy in five charts.
“You’ve had two years of Scotland underperforming, and if that trend continues, and the oil price remains low,” maybe voters “do listen to that,” said David Owen, an economist at Jefferies International in London. Still, “what we know about the Brexit vote, Donald Trump’s election in the U.S. and so forth is that politics often trumps economics.”
Sturgeon, leader of the Scottish National Party, wants a vote toward the end of the Brexit negotiations and set out her plan to the nation’s parliament on Tuesday. The lawmakers in Edinburgh are expected to give their consent on Wednesday, though Prime Minister Theresa May has rebuffed the idea of a referendum as she prepares to trigger two years of formal Brexit talks on March 29.
After initial strength in the months following the 2014 referendum Scotland’s economy slowed and lagged the rest of the U.K. through the third quarter of last year, according to Scottish government data. More recent estimates from the University of Strathclyde in Glasgow indicate that trend may have continued in the last six months.
The drop in energy prices hit investment and activity in the oil and gas industry. Scottish government revenue from the North Sea on a geographical basis fell to 60 million pounds ($75 million) in the 2015-2016 financial year from 1.8 billion pounds a year earlier. In the six months through September, the nation showed a loss of 279 million pounds because of tax refunds. In the Scottish government’s blueprint for independence the last time, North Sea revenue was forecast to be at least 6.8 billion pounds for the current financial year.
That would have fed through to Scotland’s finances if the country had chosen independence. The budget deficit would have widened to 9.5 percent of gross domestic product for the 2015-2016 financial year, based on government data that shows the country as a separate entity. By comparison, the U.K. as a whole showed a shortfall of about 4 percent of GDP as government spending cuts took hold.
Job losses in the North Sea oil and gas industry also meant Scotland’s labor market showed more volatility than the U.K. as a whole.
One thing that probably hasn’t changed much since the last referendum is the reliance of Scotland on its southern neighbor for trade. Excluding oil and gas, almost two-thirds of the nation’s 78.6 billion pounds of goods and services sold overseas in 2015 went to customers elsewhere in the U.K. Only 16 percent went to other EU countries.
After Scotland voted to remain in the EU, Sturgeon wants to ensure it keeps access to the regional bloc’s single market regardless of whether the U.K. pursues a “hard Brexit” and abandons it. As she told the Scottish Parliament: “in the circumstances we now face, for the U.K. to stand in the way of Scotland having a choice would be wrong, unfair and unsustainable.”