Economic risks of Scottish independence ‘enormous’

Published on Friday, 29 August 2014 12:15
Written by Daniel Mason

Scottish independence would lead to serious economic uncertainty that might put the recovery at risk, according to the president of the CBI, Sir Mike Rake.

In a speech in Glasgow, he said the business lobby group had not seen "any substantive evidence for the position that independence would be economically beneficial for Scotland or the rest of the UK".

The referendum on whether Scotland should become an independent country will take place on 18 September.

"I have a deeply held conviction about the UK," Rake said. "A firm belief that we are, and always have been, greater than the sum of our parts - and that we are stronger for it." He said Scotland's ability to survive outside the UK was not in question, but its ability to prosper was.

"The risks of a yes vote for Scotland and the UK are enormous," he said, adding that independence would "create real uncertainty that could prejudice the recovery both in Scotland and across the UK".

"After more than three centuries of working together, we have established significant common interests on which businesses and consumers rely: the single labour market and the freedom of movement of our citizens on shared infrastructure platforms.

"The goods and services from key sectors in Scotland like finance, energy and defence thrive by virtue of being part of our internal market of 60 million consumers, as well as being linked to a network of regulations, investments and support."

He added: "By being in the UK, Scotland also benefits from the gifts of our shared public institutions: the NHS, the BBC, the Royal Mint, the armed forces, the security services, Jobcentre Plus, the Forestry Commission - there are over 200 bodies in all.

"But there is a profound difference between how we share them now, and the sharing of them with a neighbouring but separate nation state; negotiations, cooperation and compromise draws up an altogether different deal."

Rake said the uncertainty over what currency an independent Scotland would use was an example of how "nothing can be taken for granted and there are no guarantees".

On Scottish first minister and SNP leader Alex Salmond's preferred choice of a sterling currency union, the CBI president said: "The liability, exposure and lack of control such a union would levy on the UK taxpayer makes it an obvious non-negotiable position for the UK government.

"All the major parties in Westminster have made it clear that sharing the pound won't happen. It's why we have wanted to see what the Scottish government's alternative plan would be."

In a TV debate with the Better Together leader Alistair Darling, Salmond said he had "three plan Bs" in the event a currency union could not be negotiated.

Rake said: "The absence of certainty for such a fundamental component of the commercial environment makes it extremely difficult for business to plan."

Meanwhile if Scotland were readmitted to the EU as a separate country it may be forced to sign up to the euro and join Schengen, of which the UK is not part, "which in turn would create a border between England and Scotland, hampering trade between both countries."

Earlier more than 130 business leaders signed a letter to the Scotsman newspaper arguing that the business case for Scottish independent "has not been made".

The letter said: "As job creator we have looked carefully at the arguments made by both sides of the debate. Our conclusion is that the business case for independence has not been made."

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