I have highlighted on more than a few occasions recently that the effects of the Scottish referendum on independence would/will be far reaching regardless of whether we had a No or Yes decision and it’s potentially negative impact for the pound
Now, as political leaders try to put together a hastily cobbled plan to devolve more powers from Westminster, we have the head of the Confederation of British Industry, the UK’s largest lobby group, warning that the Scottish referendum process damaged UK PLC — and that now is the time to prove the whole country is “open for business.”
Sir Mike Rake, president of the CBI, cautioned that the two-year long referendum debate had delayed investment and damaged the image of British businesses abroad but speaking to The Sunday Telegraph he said all was far from lost.
There’s no doubt that whilst investment north of the border has continued, some has been slowed or delayed.
I’m not saying there’s been no investment. But this is the first positive step towards sanity being restored, towards thinking that the UK is open for business once more.
His comments are echoed by Steve Varley, UK chairman of Ernst&Young, who points to recent figures showing that Scotland’s share of foreign direct investment projects in the UK fell slightly last year, as uncertainty surrounding its future grew.
He cautions that the No vote does not guarantee investment, and warns that the policy landscape into which overseas companies might invest is “far from clear.”
What is certain, though, is that international investors already committed to Scotland and the UK face an uncomfortable wait until policy certainty returns. And those with money to invest will want certainty before they commit
However, with moves to hand more powers to the Scottish Parliament, and to explore the question of greater powers for England, both E&Y and the CBI warned about the problems of tax arbitrage between the regions of the UK and the impact that could have on further growth.
There is a real chance that further devolved powers will create stronger competition between Scotland and the rest of the UK as they vie to attract industries and investment.And job arbitrage could well be possible on either side of the border depending on the rates set
Ok it could be more scaremongering, but it does highlight the various issues to consider on the No outcome that I have discussed previously, and why I recommended a GBP sell on the No vote prior to the outcome and here again afterwards.
And why I, for one, will remain more than cynical on the UK recovery for some time yet.
Full Telegraph piece here
