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After Brexit, will Scotland leave the U.K. soon?

There’s a real chance of a new independence referendum in Scotland soon.

Scotland's First Minister Nicola Sturgeon committed to seek approval for a second referendum, causing another headache for Britain who already prepare for a future outside the European Union.

Sturgeon, the leader of the Scottish National Party, has argued that her nation is being pulled out of the EU against its will. In June last year, 62% of Scots voted against leaving the EU.

The announcement came just hours before the U.K. parliament gave the British government the green light to start the formal process of leaving the EU.

Scotland voted against independence in 2014, but Sturgeon said that circumstances have now changed. Prime Minister Theresa May, for example, has made clear that Britain will be leaving the EU's single market as a result of Brexit.

May's government did not welcome Sturgeon's call for a second independence referendum, saying in a statement that it would be "divisive and cause huge economic uncertainty at the worst possible time."

It would certainly result in economic uncertainty: Scotland would have to figure out everything from which currency to use, to how to manage trade with the rest of the U.K., and what to do with its share of the national debt.

An independent Scotland would have to decide which currency to use. Those campaigning for independence in 2014 suggested it should continue to use the pound in a currency union with England. But U.K. lawmakers said they were not ready to share.

Another potential option would be Scotland to join the euro. That's easier said than done: Scotland would most likely have to apply to join the EU as a new state.

It's also unclear what would happen to Scotland's finance industry if it decided to depart from the U.K. Edinburgh is the U.K.'s second largest financial center after London and home to a cluster of asset management companies. The Royal Bank of Scotland is headquartered there.

Many of the biggest banks threatened to leave the country if Scotland voted for independence back in 2014, but the tide has shifted since then. If independent Scotland somehow managed to stay in the EU, it could become an attractive alternative to London for banks seeking to safeguard their European operations after Brexit.

 

 

 

Author: Roger Gain
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