LONDON — Scotland is heading for a possible second independence referendum, raising new uncertainties about the future of the British defense sector if the move to break away eventually succeeds.
While the timing of any new referendum remains uncertain, and it's possible it may never take place at all, senior defense sector figures here are already warning the impact of Scottish independence would likely be far more damaging than Britain's upcoming departure from the European Union, colloquially known as Brexit.
"I don't think that any of this [leaving the EU] will involve disruption of the kind that could potentially arise were Scotland to become independent," Tom McKane, a former senior U.K. government defense policy adviser and now a senior fellow at the London-based Royal United Services Institute think tank, told delegates at a conference on March 14.
It's a sentiment endorsed by RUSI's deputy director general, Malcolm Chalmers.
The questions about Scotland, and Brexit's reawakening of concerns over the peace process in Ireland, could "in each case have profound effects on defense," Chalmers told attendees of the conference, which was held to look at the possible impact of Britain leaving the EU.
In a recent survey by Rand Europe, analysts warned that Scottish independence could pose "practical, financial and political challenges in defence and security, with significant implications for the UK, EU and NATO — especially given the UK nuclear force is based in Scotland."
The Scottish Parliament in Edinburgh is expected March 28 to narrowly vote in favor of a Scottish National Party government proposal to hold an independence vote as a result of the U.K.'s decision to leave the EU.
The Scottish vote was scheduled for March 22, but the referendum debate in the devolved Scottish Parliament was suspended following a fatal vehicle and knife attack in London.
The Conservative-led government in London has already rejected the SNP request to hold a new vote by early 2019 and said that consideration of a possible referendum is off the table until negotiations surrounding Britain's departure from the EU are complete.
London's approval is required for a legally binding referendum, and it's not certain when, or if, that might be forthcoming.
The Scottish parliamentary vote is now scheduled to take place just 24 hours before British Prime Minister Theresa May officially notifies the EU of London's intention to leave.
Known as Article 50, the notification will trigger withdrawal negotiations, which should see Britain exit the EU in March 2019 — although few think the detailed negotiations will be complete by then.
The SNP says Scotland is being bundled out of the EU against its will after an emphatic local vote last year in favor of remaining.
It's only been a little more than two years since the SNP decisively lost an independence vote. At the time of the first referendum, the SNP said it would spend £2.5 billion (U.S. $3.1 billion) annually on defense and that it wanted a share of the U.K. armed forces equipment, including a squadron of Typhoon jets and two frigates.
Scotland's high-tech defense industry and the future of the Royal Navy's nuclear deterrent submarine base on the Clyde would be among assets at risk from an independence vote.
The future of the Royal Air Force base at Lossiemouth, as a home to a new fleet of Boeing P-8 maritime patrol aircraft due to be delivered here starting 2020, would also be uncertain. Boeing recently announced it would invest about £100 million in building support and training facilities at the Scottish base, which is also home to a fleet of fast jets.
But a fracturing of the United Kingdom, its military forces and its budgets could have serious knock-on effects across the entire defense sector here, at pretty much the same time Britain is trying to get to grips with its departure from the EU.
"It's another big bucket of uncertainty coming industry's way," said Jon Louth, the director for defense, industries and society at RUSI. "Some people are predicting that without Scotland, the U.K. spending profile would almost by definition go down at a time when other significant European nations' defense spending profiles are going up.
"A potentially profound reduction in demand and the defense cost associated with decoupling would be a perfect storm. A number of institutional investors might find that a step too far, having been squeezed by the Brexit uncertainty; then being squeezed by uncertainties about a possible Scottish referendum, they may decide they could better use their money elsewhere.
"Industry thoughts now are about: Will they have access to EU markets? will they have access to their supply chains without tariffs post Brexit?" he said. "Now, similar conversations will be starting about what, initially at least, will probably be an isolated Scotland [from NATO and the EU]. That would be hugely distracting, and that's before you get onto the debate about companies having a lot of balance-sheet assets in Scotland.
"For example, it could prompt very interesting questions again about BAE Systems and its Glasgow naval shipyards.There could also be lots of difficulties with some of the software houses in and around Edinburgh that have significant lines of defense development. It just adds to the uncertainty again."
In the 2014 vote, the BAE yards in Glasgow were at the center of a referendum row between with the central government in London signalling it would move Type 26 frigate and other naval orders out of Scotland if it lost the independence vote.
A contract for the building of the first three of eight Type 26s in Glasgow is expected to be announced by the Ministry of Defence early this summer.
BAE Systems, Babcock, Leonardo, Raytheon, Rolls-Royce and Thales number among the major defense companies with significant research and manufacturing facilities in Scotland.
Trade lobby group ADS figures show Scottish defense industry turnover running at about £2.2 billion with just more than 60 companies in the sector employing more than 12,000 people.
The biggest single employer, however, is the Royal Navy's nuclear submarine facilities at Faslane and Coulport on the Clyde.
More than 6,000 military and civilian staff man the Clyde facilities, and that number is set to rise to more than 8,000 by 2022 as the Navy centers all of its nuclear submarine base operations in Scotland.
The future of the base was a key battleground in the 2014 referendum, with the SNP promising to banish nuclear submarines from the Clyde and turning the facility into a conventional naval base.
Ahead of the last referendum, a U.K. parliamentary defense committee's review into the likely impact of Scottish independence concluded that the defense industry there would face a difficult future.
"This impact would be felt most immediately by those companies engaged in ship building, maintenance, and high end technology," the committee said. "We believe defense companies in Scotland would be forced to rapidly reassess their business strategies, with the result that relocation of operations to the remainder of the UK would be an unwelcome but necessary decision."
Analysts here said that nothing has changed in the last two years to alter that assessment.
Andrew Chuter is the United Kingdom correspondent for Defense News.