Devolution might satisfy their demands.

How to Calm Secessionist Fever

Mark Gilbert is a Bloomberg View columnist and writes editorials on economics, finance and politics. He was London bureau chief for Bloomberg News and is the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”
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"Devo max" is the dystopian-sounding term the British government is now using to describe the nation's tax-and-spending future in the wake of Scotland's failed-but-still-seismic referendum on independence. It refers to the devolutionof government that is supposed to occur throughout the realm along the lines of what was promised to Scotland during the heat of the campaign. The British government -- one of the most centralized in the world, delivering 48 percent of public investment in the country, almost twice the global average -- has pledged to transfer some control over taxes and spending to the regional governments of not just Scotland but also England, Northern Ireland and Wales. It's a model that other nations -- particularly Spain -- might successfully adopt to satisfy secessionist-minded regions.

The U.K. isparticularly in need of decentralization. London already has 19 percent of jobs in the U.K., 21 percent of its company headquarters and 25 percent of gross domestic product. More than half of Londoners have post-college education, compared with less than 40 percent for the country as a whole. And better skills mean higher wages; household income is 22 percent lower for those living outside of the capital.

QuickTake Scotland's Independence Bid

British lawmakers say they support giving local authorities greater tax-making powers, more control over spending, and the ability to borrow to invest in infrastructure projects -- but they're bungling an early opportunity to back words with action. Plans to move a large contingent of civil servants out of the capital to save money are unambitious, aiming to send them only as far as the city's suburbs.

The math makes sense: The real-estate cost of employing a worker in Whitehall, near Buckingham Palace, is 35,000 pounds ($56,000) a year. Move the employee 10 miles south to Croydon, and that drops to just 3,000 pounds. The problem is the geography. If the bureaucracy makes it no further than the suburbs, talent will still be trapped in the capital. If the U.K. is serious about merging English cities into a "Northern powerhouse," as Chancellor of the Exchequer George Osborne has said, it needs to relocate government workers to Liverpool and Leeds, not Stratford and Croydon.

Following Scotland's rejection of independence by about 55 percent to 45 percent in last month's referendum, Catalonia's demands for autonomy are now the loudest on the international stage. So far, Spain has mostly resorted to legal maneuvers to counter Catalan President Artur Mas's threat to hold an unauthorized referendum among his 7.4 million voters. That's a mistake; a poll at the beginning of the month by the regional government's Centre d'Estudis d'Opinion showed almost 71 percent of voters in favor of having their say on the issue.

QuickTake Spain's Separatist Tinderbox

A better solution would be to learn from the U.K. example. The Spanish government could head off a potentially scarring campaign by voluntarily relinquishing some of the financial jurisdiction Catalans want for themselves. Andreu Mas-Colell, a former Harvard University economics professor who is the region's finance chief, said last weekhe'd be open to the idea provided taxing powers were part of the deal: "The more attractive is the offer on the table, the more likely that the vote will end up developing as in Britain," he said.

The U.K. government almost lost Scotland, realizing very late in the day that scaremongering is no substitute for positive reform. Spain shouldn't miss the opportunity to win over the Catalonian secessionists by ceding enough financial control to satisfy their desire for liberty without yielding full sovereignty.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Mark Gilbert at magilbert@bloomberg.net

To contact the editor on this story:
James Greiff at jgreiff@bloomberg.net