Scottish Independence Too Risky for Economy, CBI Lobby Says
Breaking up the internal market would increase costs for businesses and consumers on both sides of the border because of transaction expenses and tax changes, the London-based business lobby said in a report on the Scottish government’s independence blueprint. The group raised concern there was no alternative plan to keeping the pound and supported the U.K. Treasury’s view that a currency union with the rest of Britain would not be viable.
The policy document “lacks clarity and coherence on issues that are vital for future economic success,” the CBI said in its response published today, four months after Scottish First Minister Alex Salmond set out his vision. “We believe that the best way to deliver jobs and prosperity for the people of Scotland is for Scotland to remain a part of the U.K.”
With less than six months to go before the Sept. 18 referendum and the gap in favor of staying part of the U.K. narrowing in some polls, the argument over Scotland’s future is heating up. Scottish nationalists say that U.K. government warnings over an independent Scotland’s currency, credit rating and North Sea oil revenue are scaremongering, while Prime Minister David Cameron said this month that people need to know the consequences.
CBI members employ 500,000 people in Scotland, the group said. That’s about 13 percent of the voting population. Its report follows comments published this week by BlackRock Inc., the world’s largest money manager, which said independence would “bring major uncertainties, costs and risks.”
A projected drop in North Sea oil revenue would drag on the economy and mean Scotland would have to reduce planned public spending projects to avoid a deterioration of 0.4 percent of gross domestic product in its budget, the CBI said.
Policies for an independent Scotland include free child care and cuts to air-passenger duty and corporation tax, according to the blueprint. The Scottish National Party said control of the country’s finances would allow it to manage oil wealth better and deliver on its plans.
An ICM Research survey published on March 23 showed 39 percent of voters in favor of independence, up two points on the month. Forty-six percent wanted to keep the status quo, a drop of three points. The seven-point gap compares with 12 points a month earlier and 14 points in a survey taken earlier in the month by TNS.
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