Ian McConnell: SNP's Mackay hits mark on Brexit amid independence poll sound and fury

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There is a danger that people might start to think that leaving the European Union while merely retaining customs-union membership is a soft Brexit because it is slightly less bad than the unarguably hard departure being pursued so doggedly by Prime Minister Theresa May. While remaining in the customs union would help address the need for future frictionless trade, this arrangement would in itself not be anywhere near enough to enable Scotland and other parts of the UK to avoid huge damage from Brexit over years and decades to come.

It is worth emphasising this week, amid all the political sound and fury over a second independence referendum, that Scotland is even more dependent for future economic prosperity than the UK as a whole on a strong flow of net immigration from EU countries. This is a simple economic reality.

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If or when the independence debate ratchets up again, economic realities will no doubt once again be in focus. And what ultimately happens on the Brexit front will undoubtedly, and justifiably, have a major bearing on the debate.

Interestingly, the arch-Brexiters drummed up support for the 2016 Leave vote with economic fantasy. And they continue not to be held sufficiently to account over their abject failure to demonstrate any actual, rather than fantastical, benefits of Brexit, in spite of all the promises they made.

They remain driven by ideology, either unaware of or not caring about the impact of Brexit on the living standards and prospects of tens of millions of people. Many arch-Brexiters seem concerned only about their belief that the UK somehow lacks sovereignty, which is a fallacy.

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There is already a renewed focus on what currency Scotland would have if it were independent. In a parallel universe in which you were able to exclude political considerations from this issue, the obvious thing would be a currency union between an independent Scotland and the rest of the UK. After all, the two economies would remain similar in structure, so a single interest rate would work for both. Benchmark eurozone interest rates have not presented problems for countries at the core of the single-currency bloc, including France and Germany. In contrast, the Republic of Ireland could clearly have done with higher borrowing costs in the boom days ahead of the global financial crisis, given its economy’s structure is more akin to that of the UK with the residential property market a key consideration.

Of course, political considerations cannot be excluded from the Scottish currency question in the independence debate. And you would hardly expect a UK Government to put down the currency cudgel and offer monetary union in the event of a second independence referendum. This presents a conundrum for the SNP. However, if we do get to the stage of a second independence referendum campaign, it would surely be folly for the SNP to abandon examination of long-term monetary union because of any ideological push by some of its supporters for Scotland to have its own currency.

A single market, of the kind we have currently in the EU, would also be an obvious thing, although there looks to be plenty of scope for Brexit to confuse this picture.

Cabinet Office Minister David Lidington signalled in Glasgow yesterday that the UK Government would not give consent for a second independence referendum, claiming the move towards another vote was not “justified”. This view will likely be unpopular with many, not just with ardent independence supporters but also with other people who were told staying in the UK was the way to remain in the EU ahead of the 2014 referendum and have since seen a Leave vote, economic damage, and a rise in English nationalism.

It is difficult to predict where things will go from here. The situation is unlikely to become much clearer any time soon so, in the meantime, the Brexit catastrophe is likely to continue to dominate the thoughts of households and businesses. Also in focus will be the future of Mrs May and the Conservative Government.

In this context, and putting the independence issue to one side for a moment, it is good to hear Mr Mackay hammer home the importance of continued single-market membership with free movement of people from and to other EU countries. Politics aside, it is a constructive and well-made point because a customs union, on its own, is absolutely not going to solve the big problems of Brexit.

We have already seen the effects of the Brexit vote itself, even before we get to the UK Government’s desired, and utterly lamentable, clampdown on immigration. Net immigration to the UK from other EU countries has plunged. In Scotland, and other parts of the UK, many citizens of other EU countries who make such an important contribution to private and public sector roles have moved elsewhere or are considering doing so. For Scotland, facing the prospect of a declining working-age population, immigration is crucial. The economy has benefited greatly in recent decades from free movement and it is worrying indeed that this is under threat.

When presented with such economic realities, the Brexiters continue to dismiss them glibly with messages that seem to hark back to days of an Empire long gone. And we have to listen to rambunctious patriotic speeches from the likes of Nigel Farage, who is once again bafflingly and frustratingly hogging the limelight with the launch of the Brexit Party. As the circus continues, and the UK is regarded by many people domestically and internationally as a laughing stock, the economic cost mounts.

In terms of economic realities, a “Brexit in name only” or BINO, which preserves single-market membership with free movement and would so aggravate arch-Leavers, is the second-best option. The best is the abandonment of Brexit.