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Business & Economy

Scottish vote’s ripple effect

Come Thursday morning, 4.1 million Scots, including 124, 000 new electorate teenagers, are expected to decide the future not only of Scotland as an independent state or to stay within the Union Jack, but will also determine the future of England itself and its position in the world.
Reflecting that great divide is the business community where some 130 business leaders published an open letter warning about the potential impact of independence to be counteracted by another open letter by another 200 businessmen backing the independence bid.
Though analysts refer to the fact that the British image has suffered by losing its empire in 1950s and 1960s, the potential loss of Scotland is different as it has been an integral part of the UK for more than 300 years.
Moreover, the outcome of the referendum is expected to be felt in the rest of Europe notably France, Germany and Spain to the extent that some observers are speaking about a potential balkanization of the old continent.
From the Basque and Catalans in Spain, to Veneto in northern Italy to Corsicans and Bavaria and even Texas, they all see in the Scots’ move a chance for more self-determination and bringing policies closer to people.
Despite rational calculations that point to a great possibility that independent Scotland could be worse off economically and fiscally, and in terms of defense, trade, education and manufacturing, the strong feeling is that “Scotland under a Scottish regime” could win the day.
In France, already President Francois Hollande is losing ground to the far right politician Mariane Le Pen, leader of the National Front, who is campaigning against wide integration of European economies. Such a call favors withdrawing from the eurozone and ends more than half a century of commitment by mainstream politicians.
In nearby Germany, Europe’s biggest economic house, anti-euro sentiments are growing and gaining momentum in polls and audience surveys.
Spain, on the other hand seems to be bracing for a constitutional fight with separatist Catalan movement claiming to be speaking on behalf of seven million Catalans, who are better off economically than the rest of their peers and would love to have it solo on their own while the government is viewing negatively any measure that may end up with separation and has vowed to block it constitutionally.
What links these trends is the growing feeling rightly or wrongly that integration of Europe and globalization has left many in the old continent behind without benefiting from the bigger European market.
This tendency for breakups into smaller units contradicts the movement to group various countries with their population and resources into bigger ones to make better use of the economies of scale for better life for the people and better performance of the economies.
And that was the rationale behind creating the European Economic Commission (EEC) that was transformed into the European Union (EU) with one currency, one central bank.
The EEC was seen as a success story by many blocs around the world, who tried their best to copy with modest degree of success like what happened with the Arab League, the GCC or the African Union, who had a better coordinated political activity, but still has a long way to go in terms of coordinating its fiscal and economic policies.
One of the strongest arguments used is the need to have a 100 million population as a base to be able to perform well in terms of economic ability to compete and have some sort of an impact. And that pushed many countries to coordinate, remove tariff and custom barriers.
The feeling about deteriorating economic conditions is widely spread. A recent survey by Pew Research, the American polling institution, carried out between March and June in 44 countries found that the tendency leans toward doom and gloom.
The survey revealed that those most pessimistic about their economies are Greeks with 97 percent, the Italians 96 percent and the Spanish 93 percent, all of whom are members of the EU.
On the opposite side, the Chinese turned out to be the most optimistic with only 6 percent thinking that their economic conditions were bad, while 11 percent Vietnamese and 15 percent Germans polled think their economic conditions were bad.
The United States on the other hand where the S&P 500 Index was trading near record level and economy seems to be doing well generally and still strong, 58 percent continue to feel the country’s economy was bad and more than 30 percent think it would get worse in the coming 12 months.
These are changing times and the Scots move may open the way for a new page in history either way they vote.

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