Monday 11 July 2016 6:00 am

A free Scotland will need the free market

Two areas have dominated debate since the EU referendum result: economics and politics. The former has been a justifiable preoccupation for many, with an undeniable uncertainty having taken hold in many corners of the City. Meanwhile, the political debate centred first on Labour's internal collapse before turning to question of the Tory leadership.

But there is a third area that, while not offering the same immediate material for punditry and analysis, will prove to be of profound significance: the constitutional ramifications. Scottish independence is back on the cards. As we have reported, serious voices are now discussing a potential future role for the city of Edinburgh as a finance hub in a newly independent Scotland that sees its future within the EU.

While such a scenario may be unlikely, it is not impossible. Indeed, the former top civil servant at the Treasury, Sir Nicholas Macpherson, has suggested that the present political turmoil gives Scottish nationalists a golden opportunity to remake their economic case.

Read more: Independent Scotland could become "Greece without the sun"

This is significant, not least because Macpherson was a staunch critic of the independence arguments in 2014. This will be taken as a boost for independence campaigners but there’s a fly in the ointment. Macpherson maintains that the economics of independence will only be viable if newfound sovereignty goes hand-in-hand with shrinking the state and cutting taxes.

Unfortunately, such policies are incompatible with the instincts of the SNP, whose old-fashioned left-wingers vastly outnumber more sensible nationalists known as ‘tartan Tories’. One figure who has discussed a potential business-friendly policy platform with the SNP says that he encounters “lots of nodding” but laments the fact that “much of their economic team comes from a very left of centre perspective”.

If the SNP truly wishes to make the case for independence with a degree of credibility, then it is going to have to do so on the back of abandoning old left principles in favour of hard-headed, liberalising and pro-growth policies.

If that circle proves too hard to square, the independence dream will remain nothing more than a romantic vision.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.