What's missing from Alberta’s separation conversation?

The views expressed in this article reflect the independent analysis and scholarly perspective of Dr. Pengfei Li, and do not constitute an official statement or position from the University of Calgary.

If you've been discussing Alberta separatism lately, the word “Brexit” may have entered the conversation.

It's easy to see why.

Three months ago, the world marked 10 years since the United Kingdom voted to leave the European Union. At the time, uncertainty dominated the conversation.

The past decade has brought some clarity.  

On one hand, concerns that London would lose its status as a global financial hub proved overstated. On the other, the UK continues to struggle with many of the deeper economic and social issues that helped drive support for leaving the European Union in the first place. 

Brexit, in hindsight, offers helpful lessons for Albertans to consider, but is it really the best analogy for Alberta's referendum conundrum?

The problem with Brexit as a comparison

“On a closer look,” says Dr. Pengfei Li, PhD, “the UK may not represent a comparable case for Alberta. The former sought economic disintegration, while we are considering a political separation.”

According to Li, we need to travel further back in time, and much closer to home, to find a more accurate comparison for Alberta: Quebec in the 1970s and 1980s.

Montreal as a mirror

In the 1970s, Montreal was Canada’s largest city and economic centre.

As the sovereignty movement in Quebec gained momentum, political uncertainty prompted many major financial institutions and corporations to look for more stability. Banks, insurers and investors moved their headquarters to Toronto.

It has now been 50 years since the Quebec separatist movement took hold, and 30 years since that province's referendum. In that time, Toronto became, and remained, Canada's dominant financial centre. 

The lesson is not only about the result of a referendum, but also how the associated uncertainty can influence where talent, capital and businesses choose to locate.

Three things to know

1. Uncertainty moves markets

Businesses make long-term decisions based on predictability. Even the prospect of major constitutional change can affect investment and location decisions.

Regardless of whether the uncertainty surrounds an economic disintegration like Brexit or a political separation like Quebec, the consequences are felt long before any political changes occur. 

2. New borders don't fix old problems

“Surprisingly,” says Li, “the sky of Canary Wharf, one of the world's leading financial districts, remains bright today, seemingly able to resist external disruption to some extent. However, Brexit has not solved the UK’s structural problems.” 

The UK retained many economic strengths after leaving the EU, but Brexit did not resolve longstanding challenges such as regional inequality and social division. It may also be reasonable not to expect a separation to solve the major social challenges Alberta struggles with today, like rural-urban inequality or mental health and addiction issues.

3. Uncertainty casts a long shadow

Montreal's experience suggests that political uncertainty, regardless of a referendum’s outcomes, can reshape economic geography, influencing where companies, capital and skilled workers decide to build their future. 

“Political uncertainty and cultural tensions finally drove major banks and insurance firms like Sun Life, RBC and even the Bank of Montreal to relocate their headquarters,” says Li, “and la belle cité passed the baton of the country’s economic capital to Toronto ever since.”

History suggests the biggest economic risk may not be separation itself, but the uncertainty that surrounds it — and the lasting impact that uncertainty can have on investment and business confidence.