John Cridland: Why businesses should vote No
My job, and the CBI’s job in representing half-a-million employees in Scotland, is to look dispassionately at the hard economic and business facts.
Scotland is an economic success story as part of the Union, the strongest part of the UK economically after London and the south east. At the same time, devolution gives Scotland the flexibility to set its course on key issues like economic development, education, health and planning, while benefitting from the security and opportunity which comes from being part of the UK.
At the moment, Scotland benefits from a credible fiscal plan and the stability of the pound. By contrast, the Scottish Government’s economic plans simply don’t add up.
Like the rest of the UK, Scotland’s fiscal position requires an austerity plan but its tax-and-spend proposals include £670 million of unfunded spending, without addressing the substantial deficit the nation would have: £2,303 per person. And we all know where that leads: higher government borrowing costs which filter down so that banks pay more, businesses pay more and people pay more for products like mortgages.
Add to that the cost, not to mention disruption, of setting up a new currency and lender of last resort. At the moment, every personal savings account in the UK is protected up to the value of £85,000 in case a bank or building society should get into trouble.
For an economy of Scotland’s size a monetary union is just not a credible option and would be highly unstable. When the Czech Republic split from Slovakia in 1993, its currency union lasted only 33 days. The Scottish Government itself has estimated that a separate currency would create £500m of business costs.
In addition, an independent Scotland would have to negotiate a new relationship with the European Union. Being part of the EU is worth £3,000 to every Scottish household and gives Scottish businesses access to a £15 trillion market.
For example, £1.45 billion of Scotch whisky is exported to the EU, around a third of the country’s total exports worldwide, but an independent Scotland would not be part of that free trade market.
Even if Scotland managed to become an independent member of the EU, it’s likely to take considerable time. All 28 EU member states would have to agree and the process took Croatia ten years.
The UK is itself a vibrant internal free trade market. There are no borders between its nations and no customs checks, and no need for passports, visas or work permits. We don’t just share the pound, but most of our laws, regulations and tax systems are the same, too.
All this creates an environment which fosters enterprise across the entire UK. Scottish companies export £18.5bn more to the rest of the UK than to the rest of the world. But drawing a line between Gretna and Berwick would create two diverging systems, which companies have said may result in them leaving Scotland, taking jobs with them.
More devolution for Scotland is on the agenda and businesses would welcome a conversation about which decisions should be more localised. But a vote for independence should be weighed with a hard hat on – and on economic terms it simply does not add up. Staying part of the UK is best for Scotland’s businesses, for prosperity and for jobs.
• John Cridland CBE is director-general of the CBI.