Scotland Threatens to Leave U.K. If Forced Out of Single Market

  • First Minister Sturgeon: Scotland must stay inside market area
  • Calls on May to show ‘goodwill’ or face new independence vote

How Damaging Is a Scotland Referendum to the Pound?

Scotland will hold a new referendum on separation from the U.K. unless it can stay in the European Union single market, First Minister Nicola Sturgeon will warn this week, adding to the pressure on Theresa May as the U.K. premier draws up plans for Brexit.

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Sturgeon will detail proposals for a new arrangement with the U.K. to enable her country to remain inside the single market after Brexit, even if the government in London pulls England, Wales and Northern Ireland out. Voters in Scotland chose to stay in the EU in June’s referendum and now face being pulled out against their wishes by votes cast in England, she said in a commentary published in Monday’s Financial Times.

“It remains my view, and that of the government I lead, that the best option for Scotland remains full membership of the EU as an independent member state,” Sturgeon said. “Independence must remain an option for safeguarding our European status, if it becomes clear that our interests cannot be protected in any other way.”

The ultimatum from Edinburgh on single-market membership will intensify the strain on May, who’s already battling to contain tensions within her Conservative Party. On Sunday, Trade Secretary Liam Fox hinted that he was keen for a clean break from the EU, while former Chancellor of the Exchequer George Osborne warned that the U.K. should keep the closest possible ties to the bloc.

May has promised to listen to the governments of Scotland, Wales and Northern Ireland before taking an agreed U.K.-wide negotiating position to Brussels for formal talks, due to begin by the end of March.

Sturgeon said she wants the U.K. as a whole to remain inside the single market, with tariff-free trade and freedom for banks to provide services across the bloc. “If the U.K. government opts not to remain in the single market, our position is that Scotland should still be supported to do so -- not instead of, but in addition to, free trade across the U.K.” she said.

A policy paper will outline how such a radical step could be achieved, including which powers would need to be devolved from London to Edinburgh, she said, warning that 80,000 jobs would be lost if Scotland left the single market. Such a solution will require “political goodwill and an openness to new ways of doing things,” Sturgeon said.

May’s office insisted on Monday that the premier will work to get a good deal for Scotland from the negotiations. “We are committed as we leave the EU to getting a deal that works for the U.K. as a whole and that means a deal that works for Scotland as well, a deal that allows British firms maximum access to operate with the single market,” May’s spokesman, Greg Swift, told reporters in London. “The U.K. as a whole will leave the EU,” he added.

‘Limit’ Options

On Sunday, Fox warned that if the U.K. sought to remain part of the customs union -- the EU’s tariff-sharing trade bloc -- it would “limit” the country’s options for new trade deals. He told the BBC’s “Andrew Marr Show” that Turkey could provide a hybrid model for partial membership of the customs union, adding that the U.K.’s future relations to the group didn’t have to be “binary.”

In an interview on the same show, Osborne warned against ending tariff-free trade with Germany and France after Brexit. He said leaving the single market and the customs union would be the biggest act of protectionism in British history.

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