Business leaders have begun to assess the possible impact of Scotland leaving the United Kingdom, with Iain McMillan, director of the Confederation of British Industry (CBI) for Scotland, saying that “many questions” remain unanswered as 2013 looks set to be a crucial year in the debate.
The business body will publish a White Paper in Autumn outlining whether businesses in Scotland would be better off with the union intact or by becoming a nation independent from England, Wales and Northern Ireland.
It has already published a paper questioning the fiscal and economic position of an independent Scotland and how an independent Scotland would replace defence jobs at Faslane in Argyll and Bute and in shipbuilding reliant on UK military orders.
With the possibility that Scotland could be left to build trade relationships from scratch, there are concerns that Scottish defence and naval contractors may lose work from foreign governments.
Businesses want to hear what an independent Scotland’s defence industry strategy would be and how would it seek to sustain exports. Domestic spending power could be weakened in an independent Scotland as the cost of purchasing military goods could increase due to the loss of the loss of economies of scale gained from UK-wide purchasing.
Many aspects relating to the foreign and defence policy of an independent Scotland would have salience for business. For example, Scotland’s membership of the EU, the international trade agreements and reach of its consular service, and the terms of those relationships, would affect trade and employment prospects.
The CBI has warned that some of Scotland’s firms may not remain headquartered in an independent Scotland, given the majority of their customers, shareholders and other stakeholders may reside in a foreign country, namely the rest of the UK.
Investment into the Scottish economy could fall in 2013 with no clear framework on tax and research and development tax credits and relief currently available in the current UK system for an independent Scotland.
A number of current UK tax incentives, including many capital allowances, only exist because they pre-date the introduction of EU State Aid rules which now proscribe which new allowances are allowed. An independent Scotland may not be able to retain such allowances.
