Jul. 9th, 2016

henry_the_cow: (Default)
Brexit is a material change of circumstance that is re-opening the debate about Scottish independence.  Some people are saying that Brexit will inexorably lead to a break-up of the UK.  How likely is this outcome?   I reckon it's about 30% and here is my reasoning.

For Brexit to have a material effect, there most likely needs to be an offer on the table for Scotland to retain a closer position to the EU than the one the UK adopts.  For example, if the UK were to leave the EU and EEA completely, and the EU or EEA were to offer Scotland a deal to remain, than I reckon the chance of independence would be around 95%.  It would only take a 5% swing from the 2014 referendum vote and such a deal would make that level of swing very likely.

But what are the chances of this situation arising in the first place?  I guess the chance of the UK leaving the EEA complete is around 40%.  It's certainly present in the tone of political debate, but it is likely to be challenging in economic terms.  If this does happen, Scotland still has to convince all 27 members of the EU to accept us, and that includes the Spanish government, which is very sensitive over its own separarist areas.  Still, the scenario in which the UK leaves altogether seems the most likely chance for Scotland to convince other governments.  Let's give this a 40% probability

The total probability of this scenario is thus 0.4 * 0.4 * 0.95 = 0.152

In my opinion, the most likely outcome of the Brexit negotiations is for the UK to leave the EU and stay in the EEA.  This would be politically challenging as regards immigration but the politicians may negotiate a short term fix combined with stricter enforcement of existing legislation.  If this agreement is reached, and Scotland is offered membership of the EEA or EU, the chance of a successful independence vote is probably less, but still fairly high - let's say 80%.  The challenge is getting the offer to stay; with the UK still in the EEA, I reckon the chances of all 27 EU states being sympathetic to Scotland are much lower, maybe as little as 20%.

The total probability of this scenario is 0.2 * 0.5 * 0.8 = 0.08

I'm leaving a 10% possibility that Brexit doesn't happen at all. This seems unlikely at the moment but the British state has significant allowance for wriggle room and public opinion may chance over the course of the two-year negotiation period.  In this instance, if Scotland were offered membership of the EU as well, I reckon the chance of a successful independence vote would be less, perhaps on a 50/50 knife edge.  But the chance of such an offer is miniscule; why would the EU offer entrance to Scotland when the UK is retaining its own membership?  Let's be generous and give this a  5% chance.

The total probability of this scenario is 0.1 * 0.5 * 0.05 = 0.0025

Finally, we have to add in the possibility that there is no offer from the EU but that people in Scotland are so fed up with Westminster's lack of competence and democracy that they vote for independence anyway.  Westminster certainly hasn't done itself any favours recently, so there may well be an increase in willingness to vote against it.  Conversely, people have also seen the economic consequence of voting to leave a union with your main trading partner, and may be less willing to take that risk for Scotland.  I'd put the chance of this at 10% if the UK leaves the EEA altogether, and 5% otherwise.

This gives two more scenarios, for a total probability of (0.4 * 0.1) + (0.6 * 0.05) = 0.04 + 0.03.

Adding all these together, the total probability of Scotland leaving the UK, under the assumptions above, is 30% (to two significant figures).


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