London – As the United Kingdom fights its way out of the COVID-19 lockdown, and at the same time stumbles toward the final arrangements for exiting from the European Union, a new preoccupation takes hold. This is to preserve at all costs the whole of the U.K. itself as the single market it has been for several centuries past, embracing the four U.K. nations of England, Scotland, Wales and Northern Ireland, and to prevent its breakup.
The situation is not without irony. The Brexit priority under the government led by Prime Minister Boris Johnson has been to depart cleanly from the EU single market project (a project still, it must be said, far from completion). Now the spotlight turns on a different single market, the infinitely older but of course much smaller single market — the U.K. itself.
How to reconcile these two apparently contradictory aims? The obvious argument is that the EU single market erodes national sovereignty, whereas the U.K. market reinforces it. More specifically the contention is that the EU system, with its inherent protectionism — especially for farmers and other traditional industries — is a drag on the British economy and its potential.
Valid or not, these views or visions are the drivers of current policy.
But if the U.K. single market is so well-established and integrated, unlike the larger EU from which it is escaping, what is the worry?
The answer lies in the word “devolution.” When the U.K. joined the original European Community 48 years ago, it did so as a single economic entity under a single set of rules and regulations. But today a large number of those rules and regulations have been devolved to the three smaller nations attached to the overwhelmingly dominant nation, England, which comprises 87 percent of the U.K.’s total gross domestic product.
For instance, Scotland now has devolved powers to make its own rules for farm support, for fisheries, for a variety of environment laws, for employment conditions, for health and safety (including how to manage the present pandemic) and numerous other trading and business conditions and standards as well. The same, on a lesser scale, goes for Wales.
Northern Ireland is different again, and anyway there is the added complication that Northern Ireland is due under the Brexit withdrawal agreement to somehow stay within EU rules in certain areas but also remain as part of the U.K. market.
So now, as the U.K. leaves the EU and hundreds of new powers in all these areas return from Brussels, they come back not to London and the central government at Westminster but to the devolved administrations in Edinburgh, Cardiff and Belfast, all hungry for more authority.
Thus, whereas at present any product or component can be made and sold in any part of the U.K., whether it be a bottle of whisky, a garment, a financial service or a vehicle part, without worry about different standards or health and safety requirements or VAT rates or labeling, the future could be different, greatly to the damage of the overall U.K. economy. It could also make the central London government’s task of negotiating overseas trade deals on behalf of the U.K. much more difficult, if not impossible.
Of course, with willingness and good faith all round there should be no problem in standardizing business and trading rules within a single state, as they have been for centuries. The world is full of examples of states with all their local regions, provinces and communities working harmoniously together. Countries like Germany or Japan or Italy come to mind, or Australia or Canada, or, most obviously of all, the United States. So where’s the difference and what’s the problem in Britain?
The difference, and it’s a big one, is that all these countries wanted to come together, in some case to federate, or go further, but always with a common purpose and direction, even after past bitter quarrels and past histories of antagonism. Compromise was always available. Respect for the larger national whole was always present.
But in the British case this is not so. The present Scottish government appears openly committed to full independence from the rest of the U.K. It wants to rejoin the EU, have the euro for currency and put up trade barriers with England to the south, even though more than 70 percent of its exports go that way and even though London supports the Scottish budget with heavy subsidies. Amazingly, the opinion polls suggest that 54 percent of the Scottish people want to follow this obviously impoverishing course.
To head off this damaging prospect the U.K. government proposes to bring forward a new law, guaranteeing mutual recognition of different regional standards (in Scotland and elsewhere) and demanding “nondiscrimination” in the production, trading and sale of all goods and services anywhere within the kingdom.
But to make that work requires cooperation and good will all round, which seems not there in the Scottish case. This is an age when mass opinion has been empowered as never before, when the people deeply distrust those seeking to govern them.
The problem is political, not economic. You cannot solve underlying political differences by economic legislation. The solution can only come from within the minds and feelings of the Scottish people, who will probably try to vote on it before long again, as happened in Spanish Catalonia recently, with or without the agreement of the U.K. central government, whose approval they are legally required to have.
Maybe common sense will prevail. Maybe the plain advantages of free and open trading with the rest of the U.K. will prevail. But if not, then some bitter lessons from Britain’s distant past, long before its separate kingdoms united, will have to be painfully re-learned. Passing new laws will be of little help.
David Howell is a Conservative politician, journalist and economic consultant.
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