Scots’ Wha Hae!

Blain’s Morning Porridge – Jan 25th 2025 – Scots’ Wha Hae!

“Welcome to your gory bed, or to victory..”

Tonight, Scots around the globe will celebrate our national bard Robert Burns. We will toast his immortal memory in our number one export; Malt Whisky. We will tell stories, sing the songs, rejoice in our culture, and, inevitably, as always happens when (n+1) Scots gather, we shall tipsily ascribe all our many ills upon our neighbours, the English.

Which is a wee bit unfair. Blaming our problems on the Sassenach (the Saxons south of the wall) is classic deflection. The inconvenient truth is the dominant theme of Scottish history has been incessant betrayal, beastliness, pillage and genocidal mayhem against ourselves. Nor can we claim no one listens – for the last 300 year’s the influence of Scots on the UK has been vastly out of proportion to our <10% of the total UK population. We absorb an overly large amount of the UK’s political bandwidth.

The march toward independence in Scotland, and the likelihood of unification for Northern Ireland, will have profound influences on future UK investment themes – not all of which will necessarily be bad.  The last 1000 years of Scots/English rivalry has been about competition: the concept of four English speaking nations (a United Ireland, England, Scotland and Wales), independent, sharing common values, each with a penchant for inventiveness and innovation competing with other could well be a great thing. It’s not worked that badly between Canada and its southerly neighbour.

But at the moment, it feels the UK is headed for yet another crisis.

Yesterday I watched Nicola Sturgeon, Scotland’s first minster, the compellingly effective leader of the Scottish Nationalists, paraphrase Burns: describing hapless UK Premier Boris as a “wee timorous trembling beastie”, frightened by democracy and terrified to grant the Scot’s independence.

In May the SNP will win a majority in Holyrood, the Scots’ Parliament. They will demand another vote on Independence. Boris will refuse and the Nationalists will make a great deal of noise till they get their way – no matter how many neferendums that may require – till they finally get independence. The only fly in the ointment may be the SNP holding its own civil war. There was a good piece in the Torygraph explaining it all: “In spite of the independence plan is the civil war between Sturgeon and Salmond damaging SNP support?”

As a proud Scot I’ve a personal interest in whether we continue our manifest destiny as the Great of Britain, or do we abandon the union? Living in England I won’t get the vote…. Or will I? It’s often been said the most effective way to secure Scottish Independence would be to give the English the vote.

For the SNP: it’s all about confidence – the confidence to make their narrative stick.

For the markets; it’s about the potential damage to UK Inc if UK Inc is dismembered. It’s not going to be a simple as a corporate divesting some worn out business units “Oop North” and focusing only on its core money making businesses in London.

The conventional wisdom is the Scots would be mad to leave the Union. Just like Brexit, the naysayers say it would be economic suicide, the high-spending/low-income state model can’t possibly work, and the divisions within the single-purpose SNP will split into destructive factions once their goals are achieved. Just like Brexit – there are two possible outcomes: Scotland could well succeed independently, but it’s unlikely if it sticks to the path the SNP propose.

Don’t assume the Scots will make a decision based on apparent logic. That would ignore the reality and the reasons for the SNP’s success – its deft playing of the Populism card. There is much they could teach Farage, Boris and Trump about how to play patriotism, a sense of being abandoned by London, economic discontent, and turning England’s Brexit into an imagined affront to Scotland.

The SNP’s success is demonstrated clearly in a weekend Sunday Times poll: 49% of Scots would now vote for independence. 40 years ago that number was in single digits. If they are denied another plebiscite, the SNP will use such a refusal to further gripe about a pernicious English government holding back the Scottish economy while denying them democracy. It will mean yet more wasted years of political bickering rather than solving the very real economic crisis across the whole UK: corporate and civil service bureaucracy, stressed health and education services, equality and social provision, and an increasingly beggared middle class.

The SNP have played a long game. For decades they were a lunatic fringe party with a modest following of Tartan-Tories concerned at saving the nation from the imagined ravages of Socialist governments south of the border. There was a hankering for the return of Shortbread-Tin-Scotland of Kilts, Cabers, Tartans, Clans, Paternalism and the White Heather Club (really cheesy Scottish Country Dancing and Andy Stewart singing about Scottish Soldiers.) Some of the SNP’s founders were so right-wing they were detained during the last unpleasantness with Germany.

In the 1970’s the SNP started winning a few seats, fielding popular mould-breaking left-wing firebrands in working class seats, and the simple economic strategy that Scotland’s economic future could be founded on Scotland’s Oil. But their greatest political boost came from Margaret Thatcher and her subsequent consignation of Scotland’s proud industrial base to the dust-bin of history.  It was a slow burn – its only in recent years did the SNP achieve breakthrough as Labour’s vote collapsed, now holding the majority of Scottish Parliamentary seats and dominating local elections.

Labour deserves the blame. Despite two Scottish premiers in a row (Blair then Brown) they failed to deliver anything to boost Scottish recovery. The SNP’s dominance at the polls is based on drawing together some very powerful populist threads over the last 20 years and then seasoning it with Brexit. Like all the best populist glamours, each is seeded with an element of truth:

1) The English government’s responsibility for the destruction of the Scots economy since 1980 and the squandering of oil revenues has resulted in massive inequality, social deprivation and imbalances across the UK where London has been the sole winner. Blame London.

2) The apparent ongoing incompetence of Bumbling Boris’ government over Brexit and the Pandemic highlights London’s inability to focus upon, and address Scotland’s unique problems. Blame Boris.

3) That a better future for Scotland – which voted to stay in Europe – is to swap London for Brussels and become a part of the emerging European superstate. Blame the English electorate. Scotland and England are not aligned.

4) Small nations are more likely to succeed. Denounce anyone who says otherwise.

5) Deflect criticism for failings by blaming the English for everything. Blame England. 

It’s a pretty simple strategy – keep saying the same thing. Everything wrong with Scotland is the fault of England, its government and its people. Not our fault. Classic deflection and denial. It’s working. More and more Scots believe it.

If you try to address the SNP on point 3, they won’t tell you what benefits Scotland would get from joining the EU. Instead, they will focus on Scotland being removed from Europe without the consent of the Scottish People – 62% of Scots voted to stay, therefore that’s a clear mandate for Scotland to leave the UK, they say.

The SNP don’t address what limited sense it would make for Scotland to put up a hard EU border with England – which consumes 60% of Scots’ exports. Scotland has nothing to gain from dumping England. Exports to Europe are a mere 18% of Scotland’s export economy. We export more to the US and the rest of the world than we do to Europe. Joining Europe (which would come with conditions), and using the Euro, will sentence the nation to years of structural adjustment – aka austerity – to meet ECB rules. But the SNP has persuaded many Scots voters the EU will be a better master than London.

There are solutions for Scotland. If the Scots want full independence give them some choices. I’m increasingly coming to view Independence is now inevitable so we ought to find a way of doing it well, and not in a rush. I’ve always had a hankering for working back home in Edinburgh.  Maybe there is job to be done establishing Scotland as a credible issuer in the Capital Markets and building its reputation as Financially Sovereign nation? Who knows…

The effect on UK investments will be interesting. Getting rid of Scotland won’t do that much to improve English finances – everyone talks about how much Scotland costs, but it’s probably less than some of the equally run-down and depressed English regions.

Perhaps the biggest danger would be the threat to the UK in geopolitical terms. Today Britain is still a G7 nation with pretensions to global superpower status as the Admiralty prepares to send Big Lizzy (our newish aircraft carrier) and its battle group on a tour round Asia to remind the Chinese to play nice. They might get there in time for the coming unpleasantness over Taiwan which seems likely to play up as the Chinese test the new Biden administration. The UK remains number 2 (after the US) in Nato, and we still bat big with the Commonwealth and global aid.

Will any of these remain true if the UK splits, and if it does will Sterling and the UK remain a favoured investment? Much to think about..

Meanwhile.. Plenty of other stuff going on around the globe this week:

New Scientist – Why vaccinating everyone on the planet may still not wipe out Covid-19

Bloomberg – While House Pushed By Bipartisan Lawmakers on Relief Plan’s Size

FT – Investor anxiety mounts over prospect of stock market “bubble”

FT – EU/Capital markets: Hybrid vigour

Thunderer – Bank of England told to get out of oil and gas bonds



Bill Blain

Shard Capital