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A Site Selection Web Exclusive, July 2019
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'Stands Scotland Where It Did?'

Martin Roche returned to his native land to smell the political mood in Scotland and ask what a newly independent Scotland might look like to mobile investors.

ONLINE INSIDER
For more than 70 years, street performers at the Edinburgh Festival Fringe have known how to navigate a balancing act. Set to unleash its latest edition in August, the festival will welcome thousands of performers from around the globe to what it calls “the world’s greatest platform for creative freedom.”
Photo: Wikimedia Creative Commons

by MARTIN ROCHE

In Shakespeare’s "Macbeth," also known as “the Scottish play,” Lord Macduff asks, “Stands Scotland where it did?” That’s the question I’ve been asking myself.

In 2016, the UK voted to leave the EU. Scotland voted 62% to remain. Brexit has reignited the debate over Scottish independence. The 300-year-old political and economic union between England and Scotland hangs in the balance.

Much has changed in the 35 years I’ve been away from Scotland. It now has its own parliament that looks after almost all domestic issues, leaving overall economic management, foreign affairs and defense, and a handful of other matters, in the control of the UK government in London. Scotland’s cities look better. Its economy is in good shape, though too many post-industrial towns have still to share in the fruits enjoyed by most. Broadly speaking, Scotland’s people seem more self-confident, more at ease with who they are than when I was a child.

What worries many of Scotland’s political, business and education leaders is that Brexit will cut off Scotland from the rich and giant market of 500 million consumers in the EU. They worry that jobs will go as businesses move to EU member countries to ensure trouble-free market access, that Scottish goods and services will face tariff barriers that price them out and let competitors take hard-won market share. They worry that the end of the freedom of movement for EU citizens to come to work and live in Scotland will damage the leisure and tourism sector. Scotland, recently voted the most beautiful country in the world by the readers of Rough Guides, has a booming tourism industry that relies on young seasonal workers from across the EU.

For many Scots, the UK being a member of the European Union provided a greater measure of Scottish political clout and status than the union with England alone supplied. Scotland was enthused by the EU and Scottish politicians were vocally more engaged with the idea of greater European integration than their English counterparts. Overall, Scotland’s people seemed content with the idea of being Scottish, British and European. How many might prefer to be only Scottish and European only time will tell.

It’s all up in the air now. Polls show a 50/50 split on the independence issue, though polls also show that the majority of Scots don’t want another referendum as a way of resolving the matter (a 2014 referendum saw Scotland vote to stay in the UK).

The politics of the Western democracies are now so febrile and fluid that only a fool would put a bet on one outcome or another. But let us consider for a moment what Scotland might look like a few years after independence.

Tone and Maturity

Andrew Wilson has no doubt how it should look from the beginning.

“The tone of our language and the maturity of our actions must from the start send positive signals to the world," he says. "The messages have to be that not only is Scotland a premier-division place to do business but also a wholly stable economy and society and a responsible member of the international community. We will be a good and positive addition to the community of nations.”


Small democratic nations tend to be more agile and quick, mainly because in a world of giants they have to be.

Wilson chaired the Scottish Government’s Sustainable Growth Commission (SGC). It’s a massive piece of work that looked at the weaknesses and strengths of the Scottish economy, setting out a broad vision and plan for how a newly independent Scotland would behave and how it would use and share the economic levers of sovereign power.

The report says Scotland would seek to negotiate sensible accords with London on a range of issues.

“It is the right thing to do,’ says Wilson. "England is our neighbor, our friend and our single biggest market. It is to our mutual advantage to be honorable and practical. We want the very best of friendships with England. That starts with accepting rights, responsibilities and obligations, which of course cuts both ways.”

A sovereign Scotland inside the European Union next door to an England out of the EU will test the patience of both nations. Scotland, as the junior economic partner, will have to be nimble, smart and sometimes perhaps uncomfortably accommodating to England. As Wilson’s SGC paper points out, small democratic nations tend to be more agile and quick, mainly because in a world of giants they have to be.

Roosevelt’s New Deal

Since as long ago as the 1930s, impressed by Franklin D. Roosevelt’s New Deal policies to stimulate economic development in the United States, Scotland has been successfully drawing inward investors. It knows what it is doing and how to meet the needs of its FDI customers. The difference will be that the new Scotland, even inside the EU, will be a small state and no longer part of the comforting envelope of the UK, the fifth largest economy on the planet.

Inward investors will need reassurances on key matters such as taxation, repatriation of profits, employment regulations, the speed and cost of key worker visas and work permits. The answer to most of these questions is that Scotland will be subject to the same EU rules and regulations as it is today. Where Scotland will have to work harder is in creating and sustaining an FDI regime that is world-beating, positioning Scotland as a place simply too good to ignore. Wilson’s SGC proposes a “Come to Scotland” package given wings by a new investment promotion agency with more money, authority and people.

Perhaps the most important element of the Commission’s thinking is on immigration. Scotland wants to grow its population, to strengthen its enterprise economy, put public finances on a more sustainable basis and attract talented and energetic people. In practical terms this means mobile capital that wants to be in an advanced economy and needs to attract the cream of the world’s engineers, scientists and managers could find Scotland a conducive place.

Scotland’s golden goose

For Scotland’s greatest living historian, University of Edinburgh Professor Emeritus Sir Tom Devine, the key to Scotland’s future prosperity is building and investing in its world-class universities and in rebuilding for the 21st century a skills base of the quality that made Scotland the 19th century equivalent of Silicon Valley. Brains, skills and enterprise.

Devine

“We need to build a citadel of excellence, not only in higher education but also in practical skills.”
University of Edinburgh Professor Emeritus Sir Tom Devine

There are some 36,000 universities in today’s world. Five of the top 200 are in Scotland. In medicine, science and engineering they rank with the very best worldwide. For Devine these institutions are the golden goose for Scotland. He warns, however, that building skills for people outside the magic circle of elite universities is equally essential to Scotland’s future.

“We need to build a citadel of excellence, not only in higher education but also in practical skills,” he says. 

At Aberdeen University they’ve been building brains in Scotland since 1495. Its newly arrived chief, Professor George Boyne, champions diversifying the economy of the Aberdeen region. Forty years of experience in extracting oil and gas from the harsh North Sea has seen Aberdeen develop as Europe’s capital for oil technology and skills.

 “We have world-leading offerings in other sectors, like food and drink, agriculture, life sciences, digital entrepreneurship and tourism. They all have significant potential for growth,” he says. (He also offers reassurances to the world at large where Brexit is concerned, noting in a recent open letter, “We attract thousands of European students to Aberdeen each year, and as an international university that has educated people around the world for centuries, I am committed to ensuring we continue to do so.”)

The Real Test

The real test for an independent Scotland will be to achieve something that most of the Western world has failed to do. That is to take the former smokestack regions and cities that have never recovered from de-industrialization and give them sustainable futures. Futures of well-paid jobs, valued skills and civic self-respect that successful places have and the less successful crave.

On the south bank of the staggeringly beautiful River Clyde lies the town of Greenock. Forty years ago it was one of the world’s greatest shipbuilding centers. Alongside building ships and marine engines it refined sugar, processed wool and made needles, tin boxes, mining equipment, tents and ropes. Almost all of that has gone now. For 50 years, Greenock hosted one of IBM’s biggest plants, employing 6,000 people at its peak. The site now lies derelict and empty, a Detroit-like symbol of decline. Like Detroit, the Greenock population fell dramatically, as the young fled to find richer pastures. Only now is the fall slowing. Whether Brexit or independence, this place is hungry for success, for hope.

River Clyde
A view of the River Clyde from Greenock, with the hills of the Scottish Highlands 20 minutes away by ferry
Photo copyright Gordon Burniston, Glasgow

Councilor Jim Clocherty is deputy head of the local council’s regeneration committee. He sits for a political party that is in favor of Scotland staying in the UK. Clocherty sidesteps commenting on the independence question, preferring to focus on making his region a better place now.

Like all local politicians he wants to sell you his patch. The good bits are that Greenock has become one of the most popular stopping places for cruise liners bringing Americans and Europeans to see the glories of Scotland, England and Ireland. Most come for a day, rushing off to Glasgow and Loch Lomond. But the welcome Greenock provides and the local guides who tell tales of merchant adventurers, engineering titans and famous ships built on its banks have turned the place from staging post to destination in its own right. So, Greenock is building a new berth and terminal to keep it globally competitive in the cruise market.

Clocherty is pushing hard to see the giant unused dry dock at Greenock come back into business. Big enough to take great liners like the Clyde-built Queen Elizabeth and the later QE2, many locals see it as an under-utilized asset with a global market. In the same part of town there’s a drive to create a food processing hub, to take the fresh produce of Scotland’s coastal waters and rich farmlands and package them for global sale.

The big boast these days in Greenock is that in April this year a buyer was found for the Texas Instruments silicon wafer fabrication plant. TI had announced the plant’s closure, but a massive effort by staff at the plant and Scottish public sector agencies working in partnership found a new owner. In came Diodes Incorporated.

"The Scottish plant offers Diodes additional wafer fab capacity to support our product growth," Diodes Chief Executive Keh-Shew Lu said at that time of purchase, "in particular our automotive expansion initiatives, as well as excellent engineering skills and wafer fab know-how to support our technical and operational performance expectations".

Music to Jim Clocherty’s ears.

Kentucky Derby

Regenerating damaged places is never easy. Certainty helps, but that’s one commodity in short supply in the UK. Brexit has thrown up not only the likelihood of the UK quitting the EU and the possibility of Scotland opting for independence, it has also created a three-year period of political and economic drift, as the London government tries to find a way out of the Brexit impasse.

Where Scotland stands in two or five or 10 years is as unknown as the next 10 winners of the Kentucky Derby. What is sure is that the 2020s will challenge this generation of Scots as much as any in history. Brexit or independence? Who knows? And it’s still possible that the UK will stay in the EU and Scotland stay in the UK.

Greencock
Greenock’s new ocean terminal will boost the town’s competitiveness in the global cruise market. The building’s design harks back to the great days of Atlantic liners, many of which were built on the Clyde.
Rendering courtesy of Richard Murphy Associates

Whatever lies in store, there’s something quite refreshing about seeing places like Greenock just getting on with trying to build a better world. It’s comforting too that at least part of the Scottish political establishment has something of a plan for the future. In the meantime, the whole of the UK, indeed the whole world, waits to see how the new UK prime minister, whoever he or she is, plans to get the country through Brexit and into sunlit uplands.


Martin Roche

Martin Roche has worked in the fields of investment promotion and economic development for nearly 40 years. He began his working life in daily newspapers and has since worked in investment promotion agencies and as a brand and strategic communications adviser to large corporations, governments, cities and FDI and regeneration agencies in over 20 countries.

Copyright Martin Roche 2019



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