With the outcome of Thursday’s Scottish independence referendum on a knife edge, commentators have started to ask what impact an independent Scotland would have on business here in the West of England.
James Durie, executive director of Business West, peers into the unknown . . .
Read every pundit’s verdict on the potential fall-out of a ‘yes’ vote in Scotland’s historic referendum, and you might well end up mightily confused – not least because everyone has a very different take and because, if we’re honest, no one really knows for sure. There are just too many variables.
As Donald Rumsfeld famously set out, albeit in very different circumstances, while we might get our heads around the “known knowns”, we’re still left with an awful lot of “known unknowns” – and that’s before we even get to the “unknown unknowns”.
From a personal perspective, I think it would be a tragedy to break up the UK in this way, as it would diminish all of us in a host of ways. It feels like a divorce we didn’t particularly want and where we’re not getting a say on the decision.
On a business front, the fall out will be overwhelmingly negative. We spend a lot of our time pumping out the message to the world what the UK has to offer potential inward investors. Once that sales pitch has taken root, we’re happy to compete hard with our regional rivals on where that investment might land. Fragmenting that message just makes us all smaller on the big global stage.
There is also the unknown impact on the economy. How will it affect sterling, exchange and interest rates, the stock market, growth, the free movement of people between here and Scotland…? At a time when we’ve only just emerged from a prolonged and hugely-damaging recession, the timing could hardly be worse. What investors, businesses, lenders and markets want is stability and certainty. This is anything but.
Over the past few weeks, we’ve been asking our members for their take on the situation. To date, well over 500 have responded and the headline figures are that 66% of respondents feel a ‘yes’ vote for Scottish Independence would have a negative impact on the national economy; just 9% feel it would have a positive impact.
Some 41% of West companies have business relationships with Scotland – and while the total value of those relationships isn’t available (few break it down in that way) there have to be concerns if the free flow of goods and services between us was impeded in any way. Indeed, a fifth of businesses here in the West think Scottish independence would have a negative effect on their bottom line.
So are there any silver linings in all this? Well, possibly. Rather selfishly, if the banks and other large financial institutions decide that Scotland isn’t the best place for them to be – as has been articulated in many quarters over the last few days – some could decide to bring some of their functions to the West. After all, we’ve long competed with Edinburgh as one of the UK’s leading regions in that sector.
On top of that, a ‘yes’ vote might well act as a springboard for further devolution of powers within the regions. Many parts of the UK would like to have more control over their own destiny, and create greater financial equilibrium with the economic Leviathan that is London and the South East.
Just last week, the RSA City Growth Commission published a report in which they maintain that England in particular is far too centralized, and for greater powers to be given to the main metropolitan areas – including Bristol/Bath.
The report says the current ‘Whitehall knows best’ approach acts as a barrier to economic progress, and we need to devolve political and financial powers to the core cities to spread the wealth. We would heartily agree with that prognosis.
We here in the West have long argued for the powers to retain more of our business rates, which currently get siphoned off to Westminster for central redistribution, in order to invest in the infrastructure that would stimulate sustainable growth.
Indeed on Friday I attended a meeting of the Core City Leaders of the UK hosted by GVA and there was unanimous agreement that now is the time to press for devolution of powers to cities – whatever the result on Thursday.
So, while I’m hoping for a ‘no’ vote, I can see opportunities too if the genie is let out of the bottle on Thursday.
