Scotland and Brexit: processing the implications

The following article by Charles Livingstone, a Partner in our public law & regulatory team, appeared in the April edition of the Business Herald.

 

Scottish businesses are grappling with the difficult political and legal questions raised by June’s referendum on whether the UK should leave the EU, not least in understanding what the post-Brexit landscape might look like. This task is made even more difficult for Scottish businesses by the argument that a Brexit vote could trigger a second independence referendum, adding an extra layer of constitutional complexity. Understanding the legal processes that would follow a ‘leave’ vote is a useful first step.

A vote to leave the EU would be followed by detailed negotiations about how and on what terms that should happen. The Prime Minister has said he would immediately hand in the UK’s notice (under Article 50 of the Treaty on European Union), kick-starting a 2-year period in which the future UK-EU relationship would be negotiated. If no agreement could be reached by June 2018 (with consent needed from the European Parliament and a qualified majority of the other Member States) the UK would leave at that point regardless, unless it agreed with all the other Member States to extend the timetable.

The future trading relationship would be top of the negotiation agenda. Trade was almost always the focus whenever Scotland’s potential EU status was discussed in the independence debate, and businesses would want the issue resolved as soon as possible. Some businesses may be content with a looser EU relationship as long as they retained free access to EU markets, but there can of course be no guarantee of that pre-referendum.

This need for detailed post-vote negotiations significantly complicates the tentative connection between Brexit and another independence referendum, as until the UK-EU picture was clear one could not know what a vote either way would actually mean. There may well be Scottish businesses dependant on access to EU markets that would back independence if that was the only way to retain that access, but may be content to stay in the UK as long as some form of free trade arrangement could be reached with the EU.

Understanding what independence would look like would mean re-opening the question of whether Scotland could transition to EU membership in its own right, and on what terms. That issue could perhaps form part of the UK’s exit negotiations, but probably not on a hypothetical basis (i.e. a second independence referendum would have to take place first). The independence ‘prospectus’ from the 2014 referendum would in any event have to be revisited, as that envisaged a continuing currency union, shared regulation and open borders with the rest of the UK, none of which may be viable in a post-Brexit scenario. The EU may not permit a Member State to share a currency and its regulatory bodies with a non-EU member, and (because the EU is a customs union) the border could only remain open if a UK-EU agreement permitted it.

Clarity on the UK’s post-Brexit relationship with the EU would therefore be essential in order to understand any subsequent independence proposal. A leave vote in June may only be the start, rather than the end, of another difficult constitutional conversation.

 

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