Scottish independence could have long-term benefits even if the country faced immediate costs, experts at the London School of Economics have concluded. 

A study of the effects of Scotland leaving the UK found that the effect would be more 'nuanced' than previous analysis has suggested, and could be more akin to the 'Velvet Divorce' between Slovakia and the Czech Republic.

The analysts also concluded it could be "challenging" for the UK Government to block a non-binding referendum on Scottish independence, as the courts may be reluctant to rule on a ballot where the result was not yet known. 

Richard Mackenzie-Gray Scott, a Research Fellow at the Bingham Centre for the Rule of Law and Geoffrey Chapman, a UK Government economic advisor at the Department of International Trade, used the break-up of Czechoslovakia as a model of what could happen to the UK in the event of Scotland becoming independent. 

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They found that access to new markets could outweight the benefits of leaving those of an internal market within a decade, and even possibly in as short a timescale as six years. 

The Herald:

Bratislava, capital of Slovakia

In the case of Slovakia, they found that its trade with the Czech Republic dwindled in favour of trade with Germany, and say that a similar scenario could develop between an independent Scotland and the rest of the UK, with the EU playing the German role.

In a blog for the LSE, the authors write: "While becoming independent would have immediate economic costs, the long-term view suggests there are benefits.

"By contrasting Scotland and England to the Slovak Republic and Czech Republic’s ‘Velvet Divorce’, our research suggests that an independent Scotland will continue growing real GDP per capita despite higher trade costs."

They added: "In the years post-independence, it is apparent that the Czech Republic substituted their exports and imports away from the Slovak Republic; the Slovak Republic did the same, substituting their exports and imports away from the Czech Republic, both in favour of Germany.

"Despite international trade rebalancing in favour of Germany, a trade partner with higher trade costs, real GDP per capita continued growing. It is contextually important to note that for the economically smaller state, the Slovak Republic quite quickly (over six or so years) substituted away from what was its much larger, more significant, export partner to what was a much smaller partner.

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"That is to say, the Slovak Republic’s exports to Germany were nearly three times less than to the Czech Republic in 1993, but as of 2019, the Slovak Republic’s exports to Germany were nearly two times greater than to the Czech Republic. While the change was less significant regarding the Slovak Republic’s imports, the same shift occurred."

The Herald:

Prague has prospered since the Velvet Divorce

The authors concluded: "Scotland’s historic economic performance has been strong, which bodes well for a small, open and independent Scotland.

"With modest population growth alongside good GDP growth, supported by stable participation in international trade, it seems Scotland is in a far better initial condition than either the Czech or Slovak Republics, and can therefore expect similar (if not better) post-independence outcomes." 

They added: "Considering Scotland has all the necessary machinery in place to become an independent state, we see no obvious reasons why Scotland would not succeed economically if it were to do so, especially if achieved within the bounds of the law.

"Although our findings might be controversial to some, we hope to show that Scottish independence, while not inevitable, is far more nuanced a matter than many have claimed. There exist several options worth pursuing for the parties to this debate."