Scottish Independence: How will it benefit Scottish businesses?
If the Alex Salmond's Yes Campaign succeeds tomorrow, the Scottish National Party is confident independence will ultimately prove hugely positive for Scottish businesses. Here's what entrepreneurs we spoke to think
Scottish businesses hoping for an immediate boost following a Yes vote are set for disappointment, according to the views we canvassed. Most believed it would take years for any positive effects to manifest themselves.
Stephen Attree of MLP Solicitors expressed a cautiously optimistic view: “An independent Scotland would have the power to run the country as it sees fit.
“In some circumstances, this might be beneficial to companies, such as with First Minister Alex Salmond’s pledge to keep corporation tax 3% lower than the rest of the UK. The fact that Scotland would be able to collect and redistribute tax receipts might also allow it to better invest in priority areas.
“But there are still so many details to be decided. It is likely that vital decisions such as what currency would be used by an independent Scotland and how much would it cost to do business will only become clear after months or years of negotiation between Westminster and Holyrood.”
Chris Winstanley, head of marketing at MBA & Company, argued that some businesses north of the border could see benefits within 12 months: “With fully devolved powers to provide tax breaks for attractive business sectors, there could be a sudden migration of businesses based on technology north of the border. This could provide start-ups and entrepreneurs with an environment where their investment provides a longer runway, or enable them to begin building businesses with a lower cash requirement.
“This is the kind of change that could be implemented very quickly, perhaps in the next 12 months.”
Robert Lyddon, banking expert and founder of Lyddon Consulting, argued First Minister Alex Salmond’s plan to boost enterprise through lower rates of corporation tax is destined to fail. He said: “Salmond’s plan is to attract businesses to an independent Scotland much in the way that Ireland has – by offering a preferential corporation tax rate and ‘sweetheart deals’ to encourage the growth of enterprise in the country.
“However, his plan is seriously flawed. The market potential for attracting businesses in this way is being squeezed, as countries like the UK, Germany and the USA – led by Obama himself – look to find ways of cracking down on companies generating a huge amount of turnover in their countries but paying lower rates of tax elsewhere.
“It worked well for Ireland in some ways, but Ireland spent 20 years rooting itself to that model, along with countries like Luxembourg. Scotland is going to have to try and compete with them directly – and it absolutely has to be in the EU to do so. And if, as is mooted, they decide to walk away from their share of the national debt, then there is no way Cameron and the UK public would support their bid to become part of the EU.”
New enterprise will thrive
Adam Riccoboni, co-founder of MBA & Company, said the UK would eventually weather the storm: “On balance, I think the UK will weather the storms of Scottish independence and continue to grow. The underlying strength of the UK recovery is based on enterprise and growth in the private sector. This is due in part to new businesses creating new jobs and winning business internationally.
“In the longer term the benefits to private enterprise post-Scottish independence will become more apparent. Britain which had been ideologically split with the median voter on the centre left in Scotland and on the centre right in England, would move to the right post-Scottish independence. This could result in more focus on private enterprise, creating new businesses to generate real wealth. I believe in the longer term, there will be more Young Guns in a UK post Scottish independence.”
Businesses would adapt
CEO of invoice finance platform MarketInvoice Anil Stocker takes a relaxed view. He explains: “In the event of a vote for Scottish independence the short-term impact on our operations would be negligible.
“Medium term currency changes would be unlikely to have any significant effect on operations either, as around one in four invoices traded on MarketInvoice are not Pound Sterling invoices – this is because we fund a significant number of exporting businesses.
“If an independent Scotland were to change the regulations around issues such as credit data availability, asset-based finance or other related matters, then we’d have to adapt accordingly, but we’re not anticipating any noteworthy upheaval. The Scottish Government would no doubt see the value of channelling funding into its small businesses in the same way the UK Government has.”
However, Kantox’s Phillipe Gelis said it will be years before businesses see any positive effects: “It is still very early days to make predictions on this. In the run-up to the vote, many major UK companies have said they will consider moving jobs and assets out of an independent Scotland, and this could potentially leave gaps for Scottish businesses to move into.
“At the same time, the question of trade would need to be negotiated between Scotland, the UK and the EU as well, with Scottish companies potentially paying increased border taxes to trade with their neighbours.
“If Scotland does vote Yes for independence, there will be a need from the markets and from the business sector for clarification quickly as to what the country intends to do in terms of currency and trade.
“Until that point, businesses on both sides of the border could find themselves suffering as consumers behave cautiously, prices increase, and trade slows down.”