Talking Point: Does Scottish independence matter to us?

THE Scottish independence referendum has dominated the news agenda for the last few days, and will surely do so until the big vote in seven days’ time.

While this is obviously a big deal for the Scottish electorate, what does a Yes vote mean to ‘The Auld Enemy’ south of the border and to businesses in the North West?
 
From a big economic picture perspective it’s clear that a Yes vote would have far-reaching consequences. The fall in the value of the pound this week after a poll suggested a surge in support for the Yes camp reflects this.

One leading international financial institution, Japanese bank Nomura even urged clients to cut their financial exposure to the UK and warned of a possible collapse in the pound. It described such an outcome as a “cataclysmic shock”.

Investors are concerned about the absence of concrete plans for an independent Scotland’s currency, and about different tax and regulation requirements, while others are worried about the cost to the UK economy of separating institutions such as the NHS, not to mention currency and the UK’s nuclear deterrent.

There are also worries over what the loss of oil will do to the UK’s current account deficit – the gap between the income it receives from the rest of the world and what it pays the rest of the world. Some estimate it could rise to 7% of GDP from an already high 4.4% in 2013.

With so much still up in the air with a week to go, it seems that the only certainty is uncertainty.

Business opinion is unsure too, some leading players in the region see the glass (of whisky of course) half empty with a Yes vote setting the economy back years and causing mayhem.

Others take a different tack, and argue there could be benefits to the region, not only in terms of businesses relocating from Scotland, but from more devolved powers to cities like Manchester and Liverpool.

Corporate financier Richard Hughes of Zeus Capital is among those fearing the worst.

He said: “I believe that independence is bad for the UK and Scotland, bringing significant and unquantifiable costs to both economies. There doesn’t seem to be any logic in splitting the two countries when it is likely to result in a bill of tens of billions annually, at least.

“In addition, the uncertainty around Scottish Independence would damage both economies in the short to medium term. It would prove extremely difficult for a new country to refresh its civil service, HMRC, NHS, police and defence forces, without significantly increasing overheads and creating a huge one-off cost – notwithstanding the legal and operational barriers.

“In the western world consolidation has been the correct business approach for the last 50 years, utilising shared resource and benefitting from economies of scale to deliver value. Independence completely reverses this logic and is a huge leap into the unknown.”

On the flip side a Yes vote could bring a windfall for the region in terms of jobs, office lets and business expansion, according to accountancy firm Saffery Champness.
 
The firm which has offices in both England and Scotland, says that  the North West, and Manchester in particular would be an obvious choice for businesses choosing to move from Scotland to England in the 18 months following the vote and before independence comes into effect.
 
John Ashcroft, chief executive of pro.manchester agrees with this micro-view. He said: “A yes vote could mean an influx of businesses into Manchester and this can only be seen as positive. Regardless of our views on Scottish Independence itself, by attracting more businesses into Manchester we are in a position to grow our wealth, talent and resources, and develop a stronger economy with more jobs.”
 
Mike Emmerich, chief executive of Manchester’s economic strategy body New Economy believes that whichever way the  vote goes, the political landscape will have changed forever.

He said: “If the people of Scotland choose independence, our national economy’s overtly centralised nature will become even more exposed. A ‘Yes’ vote would only amplify calls for better fiscal distribution across the country, which could be achieved by devolving decision-making powers and shaping our major cites into independent powerhouses.   

 “The imbalance of the UK economy has been a major driving force behind the argument for Scottish independence. If Scotland remains ‘in’, it is very unlikely to dampen efforts for decentralisation. Our cities are the key to unlocking economic growth and many people are beginning to recognise this – as recently demonstrated by Glasgow joining the Core Cities Group.

“If Scotland remains part of the UK, we should see it as a call to action to further engage with its cities and ensure even more weight is added to the case for devolution.”    

Echoing this sentiment Chris Fletcher, director of policy & communications at Greater Manchester Chamber, said: “The view that is gaining in strength is that, irrespective of the result,  Scotland will end up with more powers than at present.

“There are already pre-programmed changes to allow Scotland greater tax independence as part of the original deal to set up the devolved government. When faced with this it is probably no surprise that many businesses feel even more removed from Whitehall decision making and little wonder that the call for greater devolution to English cities is gaining momentum.”

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