Iain Macwhirter: Scottish independence won't be won or lost over finance - Brexit showed that it's not the economy

Scotland has a nominal deficit of several billions of pounds which could cause immediate fiscal belt-tightening if the Barnett taps were turned off. I say nominal because there is much controversy over Hague’s figures.

However, he won a significant victory last year when the Scottish Government largely accepted, in the Sustainable Growth Commission, his arguments about Scotland’s fiscal position, based as they are on the GERS calculations of Government spending and revenues.

Nicola Sturgeon now accepts that independence will involve short-term spending restraint. That’s better than long-term decline under Westminster rule, she says. You’d think that this admission would have damaged the SNP’s electoral standing, but the reverse is true. Last month they enjoyed another landslide victory.

So here’s the puzzle: why have Scottish voters not punished the SNP for agreeing that independence could mean, at the very least, a period of economic dislocation and public spending cuts? The Growth Commission numbers suggest that SNP promises of more cash for the NHS and social care, a costly new benefits system, compensation for Waspi women, electrification of transport and many other spending commitments would be hard to achieve.

At the very least taxes would have to rise. But Scottish voters don’t seem particularly worried. This is because they are bothered about something more important than deficits. Brexit shows that when it comes to issues of sovereignty and identity, it isn’t “the economy, stupid”. Rarely has a political axiom been so comprehensively disproved. It clearly isn’t the economy that has been driving events in the UK.

Looking back over the past three turbulent years, it’s obvious that Remainers had the best arguments. If you regard Brexit, as Hague would, as a purely economic exercise in cost-benefit analysis, it stinks. Leaving the largest and wealthiest free trade area on the planet is almost impossible to justify on narrow economic terms.

There will almost certainly be a quick and dirty free trade deal negotiated in 2020 that will remove tariffs on goods. But 80% of UK trade is in non-physical services. There is bound to be an increase in non-tariff barriers to British trade with the single market which will affect UK businesses. That is why so many financial companies have already been setting up shop in Dublin to operate within the rules of the EU single market.

Supply chains will be disrupted, which is why car manufacturers were so opposed to Brexit. There have been problems on the high street this Christmas with the shortage of casual labour. The departure of EU citizens is likely to damage education, agriculture manufacturing and services, especially care services.

Left-wing Remainers tried to claim that in some way it was billionaires who were behind Brexit, but this was never the case. Remain was, is, a thoroughly pro-capitalist, pro-business case, vigorously pursued and financed by the largest corporate interests, from car manufacturers to banks.

Gina Miller is no socialist. Nor is the governor of the Bank of England, the head of Goldman Sachs, or the bosses of Jaguar Land Rover and Honda. It was a handful of pub-chain capitalists, such as Tim Martin of Wetherspoon, who backed Brexit. They are essentially English nationalists who think that Brexit is in some way a declaration of independence.

Brexit, as they saw it, was about winning freedom from unelected Brussels bureaucrats and letting Britain stand strong in the world. I’d say that’s nonsense, of course. It was never clear that membership of the single market involved a diminution of British sovereignty, even though much trade legislation had been ceded to Brussels. But economic rationality is really not the point.

Brexit was essentially an argument about democracy and nationalism. As the General Election has shown, for millions of voters the economy, finance and fiscal policy had very little to do with their political priorities. Remainers were comprehensively defeated because they appeared to do down Britain and ignored the will of the people. Brexit had won the referendum, and no amount of economic reality was going to change voters’ minds.

The Scottish Government loathes Brexit, and for very good reasons. Scots did not vote to leave the European Union for a start. But in the longer term, Brexit is very good news for the SNP. No matter what arguments unionists such as Hague deploy in future about Scotland’s deficit, it will surely not determine whether or not Scotland leaves the UK.

There are three immediate reasons why the Scottish deficit does not, at present, deter people from voting SNP. The Scottish Government has managed the finances of Holyrood reasonably competently over the past decade. There is great scepticism about spending arguments, which voters tend to dismiss as Project Fear.

Thirdly, departure from the UK would not happen overnight, and there would be complex financial and trading negotiations before the Union was dissolved.

But forget all that, because the urge for freedom trumps any argument over a few billions in tax revenues. Scottish voters know, intuitively, that Scotland is a relatively wealthy country, better off than most regions of England. Labour productivity is comparable to the UK average. Scotland has prodigious natural resources and a highly educated workforce. Scotland has the national income of Portugal and the population of Slovakia.

That’s all they need to know. Indeed, were I advising the SNP, I’d say they should stop agonising about currency, fiscal transfers and deficits. What will defeat those arguments is not more numbers, but the emotional appeal to national identity that won Boris Johnson his election victory.

Scots did not vote to leave the European Union. They did not vote to lose their EU citizenship, with all the protections that brings. They did not vote to cut EU immigration; did not vote to accept trade deals with the United States; did not agree to the diminution of environmental standards; and did not vote to be subjected to untrammelled Tory rule from Westminster.

That’s really all the SNP need to say. Voters will do the rest.