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Scottish Defense Suppliers Risk Exclusion in Independence

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June 14 (Bloomberg) -- Scottish suppliers to the 34 billion-pound ($53 billion) U.K. defense industry risk being excluded from contracts should the country vote next year to pursue independence, according to the British government.

Companies might be unable to bid for work that falls under the national procurement procedure, including on warships, the government said in response to a report by a committee of lawmakers examining the consequences of independence. That procedure allows a country to be exempted from European Union fair-competition rules when it’s a matter of security.

“We believe that integrated defense is best for all of the U.K., including Scotland,” the government said in its statement published in London today. “However, the current industrial structure and outlook may be affected should Scotland become independent.”

Defense is a key element of the debate over Scottish independence in the run-up to a referendum next year. As well as the future of lucrative contracts, the U.K. has stored its nuclear weapons in western Scotland for 44 years and could be faced with finding the missiles in a foreign country should Scottish nationalists win their bid for full autonomy.

A “yes” vote on Sept. 18, 2014, will lead to the removal of the submarines and warheads, according to the Scottish National Party, which runs the semi-autonomous administration in Edinburgh.

The U.K. government in London is opposed to independence and has so far focused on the economic effects, also when it comes to defense. Lawmakers said in a report in January that Scotland’s shipyards would lose contracts and be “doomed” if the country votes to leave the U.K. after three centuries.

To contact the reporters on this story: Rodney Jefferson in Edinburgh at r.jefferson@bloomberg.net

To contact the editor responsible for this story: Eddie Buckle at ebuckle@bloomberg.net

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