The vote on Scottish independence is just two days away, and if the yeas have it (it’s now a statistical dead heat) we’ll be watching the unfolding impact on Scotland and the rest of the UK for years. But looking ahead to 2017, this week’s vote could have major implications for the rest of Europe as well as it changes the balance of euroskepticism in the UK and makes a British exit more likely.

Scottish independence changes balance of pro/anti-EU camps

British Prime Minister David Cameron has said that if his party wins the next parliamentary election next March he will hold a referendum on EU membership in 2017 following attempts to negotiate EU reform. British antipathy toward the EU has come down in recent years, but those average results are skewed by region: Scotland is both more progressive and more pro-EU than the rest of the UK. If they become independent, the Tories are more likely to win reelection and euroskeptics are more likely to get their way two years from now. A lot can happen in politics (such as voters punishing Cameron for the Scottish vote), but the odds of a British exit may go up dramatically this week.

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Negotiating British demands

Deutsche Bank analysts Barbara Böttcher and Eva Schmithausen identify some of the key areas of reform that the EU needs to address to keep the UK happy. Completing the Single Market for services, where London the UK has a competitive advantage over most other EU member states, is already planned, though the UK would like to see more progress. Similarly, the British demand to reduce EU bureaucratic red tape and push free trade agreements with non-EU economies has plenty of support from other EU governments.

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Managing a multi-speed Europe with varying levels of integration is more problematic. The Qualified Majority Vote rule that comes into effect this November gives eurozone countries a lot more weight when they vote together, and when Latvia takes up the euro next year the eurozone will be able to pass EU laws without bringing a single non-euro member to their side. If the UK doesn’t get some concessions devolving power back to national governments, it may not want to stick around for that caucus to turn against it.

Other issues including migratory flows, access to benefits, and the relationship between the European Court of Human Rights and the British legal system may not take center stage among negotiators, but they can add fuel to the fire if negotiations over other systemic issues break down.

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Brexit

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