ALL THIS TALK of Scottish trade with the EU distracts from the reality that our trade with the UK is growing far faster than with the rest of the world and that most of what we export to the EU doesn't need the single market.
Did you know that we export four times as much to the rest of the UK as to the EU? Really you did? That's too bad because that isn't half as important as what we export and how trends have changed over the last decade or so.
A glance at the Scottish Government's own figures shows something quite striking, Scotland isn't a very good exporter of anything really. Take out refined oil products (coke, fuel) and whisky and we don't export much that hasn't been distilled somehow. It shouldn't take an article like this to point out the obvious. You cannot export things you simply do not make.
Scotland has become a largely de-industrialised economy. The coal and iron that fuelled our industries of old has gone. Bathgate, Linwood, Methil, Irvine are all now commuter towns. Our biggest asset in Scotland today is proximity within the central belt that supports a vibrant knowledge-based economy.
Our exports are driven by our output and that is mostly services.
Wholeselling of fish and agriculture, professional and scientific services and admin dominate. Much of Scottish activity supports UK firms exporting, and so disrupting the UK single market also would disrupt our exports abroad.
That Rotterdam effect we heard so much of during the Brexit debate becomes the Tilbury effect, the Felixstowe effect. Something like that anyway.
Finance? £200m pounds a year. Electronics? £600m. Machinery? Ditto. Move onto coke and fuel and that's £2.3bn. Another £1.2bn is whisky. A few hundred million more for salmon and spuds. Mining of various kinds brings in another £600m. Electronics and machinery benefit to some degree from single market rules one could argue, then again China copes. Oil and booze? Nah. Not at all.
Scotland just isn't involved in many integrated supply chains for manufacturing anymore so any single market gains which can help are just not felt here. The non-tariff barrier elimination, in exchange for arduous red tape, doesn't help when your exports are primarily, well, primary.
Then when we come to total exports over the last 15 years it's horrendous as is seen here.
Exports to the EU have flatlined, there has been no growth in 15 years, while exports to the rUK have almost doubled! So too have non-EU export, with the good old USA our top market. The rUK has been Scotland's fastest growth market in aggregate for the last 15 years and we propose to leave its regulatory framework? Madness.
Sturgeon should get off her high horse.
As oil production slides, shale gas imports climb and alcohol sales grow (increasingly led by East Asia) – the trends work AGAINST staying in the EU’s single market. Increasing regulation of financial services and labour laws will make Scotland less attractive for outsourcing work from London: Newcastle, Leeds and Manchester could offer the same base with a British government keen to deregulate wherever possible.
The single market just does not have the trade advantages the SNP imagines. This is not about market share. Even if Scotland kept all current trade with both the EU and UK from the moment of independence we would then be locked in a regulatory framework more burdensome to business exporting to the UK, more so because many firms would need to comply with at least two overseas regulators per sector, assuming Holyrood doesn’t get creative with legislation in the meanwhile. The end result? Declining output exported to the UK as competition bites.
The sums just don't add up. Finland saw Nokia wiped from relevance in only a few years. In that case a lack of innovation was the main issue. Scottish firms could quickly see their relevance to the UK fall sharply on the back of single market constraints to competitiveness. Fortunes can and have changed that rapidly.
The UK has many problems and a lot of them came from the EU though of course not all. Scotland's trade policy is best served not by special deals and magic beans but by being competitive in the first place, to be able to have things to export in the first place. That needs an Anglosaxon, or should that be Angloceltic, model to grow our economy with a global perspective.
A deregulating British single market and a common trade policy will drive Scotland forward, not chasing a shrinking Europe that has given Scotland no growth for over a decade and a half. It has proven it is not the winning ticket, and we said so back in June.
The best is yet to come.