A DUP MP said last night on #BBCtw that Scotland’s largest export market is the United Kingdom, so it would be stupid to turn our backs on it by going independent. This has to be one of the most misleading and ridiculous arguments I’ve ever heard against independence.
Firstly, the actual amount of Scottish exports to the rest of the UK is unknown because the treasury doesn’t produce data for internal trade. It’s deemed impracticable. There’s also no legal requirement for companies to produce financial data at a UK constituent country-level.
Since no official hard data exists, the Scottish Government commissions an annual survey (GCS) to collect data on company exports outside Scotland. Larger well-known businesses have a greater chance of being sampled.
‘64%’ is often referred to as an official figure of Scottish exports to rUK, even by the UK government. This figure is from the Scottish Government survey, so the Scottish export figures that are relied on are actually based on relevant company estimates rather than hard data.
For this reason, the claim that 64% of Scottish exports go the the rest of the United Kingdom is dubious and is likely to be untrue.
There's also difficulty in defining what a Scottish export is. Many Scottish goods are exported overseas from ports outside Scotland, so don’t get counted as part of Scotland’s revenue. North Sea oil and gas export figures are recorded as UK exports instead of Scottish exports.
Secondly, Scotland’s trade with the United Kingdom wouldn’t simply cease overnight after independence. It wouldn’t be in the UK’s interests to erect trade barriers with Scotland. If practicality prevails, trading would continue as normal.
One thing we should remember about the Scottish economy is that the regulatory, tax and financial framework under which it operates is almost entirely decided by the UK parliament. Scotland can’t set its own income tax rate, or its economic and fiscal policies.
With the economy so highly integrated with the rest of the United Kingdom due to UK government economic policy, Scottish businesses rely on conducting trade within the United Kingdom more than with global markets.
If Scotland ran its own economy, the it would be better placed to make decisions to correct this trading imbalance. Scotland could rapidly boost its exports to the European Union and the rest of the world.
Ireland is an example. Most exports went to England from the 1100s until around 1979. After independence its interest rates were still set by London due to the continued use of Pound Sterling, leading to continued reliance on exports to UK.
Economic and fiscal independence eventually allowed the Irish economy to diversify and grow. Ireland’s reliance on the UK for exports decreased after it joined the EEA in the 1970s. Just 16.8% of Irish exports went to the UK in 2015.
The figures we do have indicate that Scotland is not trading with the EU as much as it should be, given the size of the EU single market. It shows that a Scotland in charge of its own affairs would be able to improve its position with regards to trade.
If we had full control of our economic and fiscal levers, then we'd be able to make our own decisions for the benefit of the country and the people who live in it.
