03292017Wed
Last updateFri, 24 Mar 2017 12pm

 

UK finance professionals believe Scottish independence makes no financial or economic sense

 

Scotland Finance

Research shows that just one in ten finance professionals support the financial and economic arguments for Scottish independence, with 22 per cent remaining on the fence.

The majority of UK finance professionals disagree with the economic and financial arguments for Scottish independence, according to new findings.

Research by Marks Sattin found that over two thirds (68%) of finance professionals practising across the UK believe that Scottish independence makes no economic or financial sense.

By comparison, one in ten (11%) agree with the financial arguments put forward for Scottish independence and a fifth (22%) remain undecided on the issue.

Economic and fiscal forecasts for Scotland

The consensus among UK finance professionals appears to be supported by recent reports from the Office for Budgetary Responsibility (OBR) and the Scottish Government – which downgraded their original forecasts for North Sea oil revenues.
 
In 2012-13, Scotland ran an underlying fiscal deficit of 8.3% of GDP compared with 7.3% for the whole of the UK, even after factoring in a geographical allocation of North Sea oil revenues.
 
The Confederation of British Industry (CBI) predicts that under the OBR’s revised oil revenue forecast, by 2016-17 – the first year of proposed independence – Scotland’s fiscal deficit will widen to 2.4% higher than the UK’s.
 
The UK’s main political parties have also ruled out continuing a currency union should Scotland become independent. Without the relative stability of the pound, it is expected that uncertainty for Scottish exporters and importers would heighten.

Similarly many expect the creation of a new trade border would increase costs for businesses that currently benefit from a common set of rules.

Scotland’s financial services sector

There are an estimated 165,000 people employed in financial services in Scotland, equating to 7.6% of Scotland’s total workforce and contributing 12% towards its Gross Value Added (GVA) – the economic value of goods and services produced.

Such a contribution to the regional economy by financial and professional services is larger in Scotland than in any other area outside London.
 
The research also found the number of financial services jobs in Scotland has grown by nearly a quarter (23%) since 2007. This averages out at a growth rate of 6% per year. By comparison financial services jobs in the UK have increased by a fifth (20%) over the same period.
 
Should the outcome of the Scottish referendum be a "Yes" vote there may be significant ramifications for the region’s financial sector, with a number of leading firms considering relocating their headquarters elsewhere in the UK.

Conversely, a recent Government Scottish Affairs select committee concluded that were financial companies to stay in an independent Scotland it would result in an "exceptionally large" financial industry, which could threaten financial stability.

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