Calculator: Does Scoxit = Brexit?

September 12, 2014

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

If Scotland votes for independence, there is a two-in-three chance that the remaining United Kingdom will quit the European Union, according to a new Breakingviews calculator. By contrast, there would be only a one-in-five probability of a “Brexit” (Britain leaving the EU) by the end of the decade if the Scots vote to stay in the UK on Sept. 18.

A “Scoxit” has a big knock-on effect on the risk of Brexit because of the dynamics it would unleash in British politics. The blow to national pride might trigger the resignation of David Cameron as prime minister and leader of the Conservative party, and his replacement by a more eurosceptic politician. The new leader might even form an electoral pact with the UK Independence Party, which is committed to pull Britain out of the EU.

If Cameron hangs on as prime minister after losing Scotland, Brexit risk still rises. This is partly because Scots, who are generally pro-European, wouldn’t get to vote in the UK/EU referendum. Cameron’s authority would also be knocked, meaning he might have to move in a eurosceptic direction to keep his hold on power. Finally, Cameron would be so bogged down negotiating Scotland’s divorce that he might struggle to focus simultaneously on obtaining a new deal for Britain in Europe that he could sell to the electorate ahead of any plebiscite.

The other factor that will go a long way to determine whether there’s a Brexit is who wins next year’s general election. If the Conservatives win, they will have a referendum on EU membership by 2017. If Labour wins, it will probably not call one. But this is where Scoxit rears its head again. Had the Scots voted to quit the UK, Labour could lose power the following year even if it won the election. This is because the divorce probably wouldn’t take effect until 2016 – meaning the Scots could still vote in the election but that Labour would lose its large posse of Scottish MPs, and probably its majority, when the formal separation occurred. In such a scenario, the Conservatives would probably swoosh back into power with a clear eurosceptic agenda.

At present, it looks like there’s about a one-in-three chance that Scotland will vote for independence and that the chance of the Conservatives winning next year’s election is just under half. It is possible to dispute these probabilities, and users can put their own assumptions into the Breakingviews calculator. But one conclusion is hard to avoid: Scoxit dramatically increases the risk of Brexit.

Scoxit

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