What would an independent Scotland mean for SMEs?
Next week sees D-Day for Scotland when its people vote on whether to become independent from the UK. Some experts say that Scottish-based SMEs could encounter financial challenges if a “yes” vote prevails next Thursday (September 18).
Businesses themselves aren’t so sure. A recent study by Vistage executive coaching firm finds than two-thirds of 400-plus Scottish medium-sized business chiefs think that a “yes” vote won’t change anything.
We examine the major issues and the preparations smaller businesses can make just in case.
Have a foot in both camps
The rest of the UK constitutes easily Scotland’s biggest trading partner. But it’s not like Scotland SMEs and the rest of the UK are suddenly going to stop trading freely over the borders.
Good is a brand consultancy which branched out from its Glasgow HQ to a second office in London, in order to open up new markets. Being prepared to trade in both the UK and an independent Scotland allows flexibility whatever the outcome of the September 18 vote.
Prepare for tax changes either way
Market specialists believe Scotland’s SMEs would not be able to avoid having to pay higher business rates after a “yes” vote. This would help fund services and agencies which are currently UK-funded. Higher taxes would also fund the creation of new processes and systems and the SNP’s promised social reforms. But change can also be expected with a “no” vote. Holyrood will soon have fresh borrowing and income tax-fixing powers.
Get new financial regulation clear
Scotland’s finance, insurance and banking industry is worth about £8 billion. It supports around 200,000 jobs, including many within London-based SMEs. But financial regulations and currency have lots of grey areas and are conspicuously seldom discussed. Some experts fear that, with the English capital being a global financial hub, money and businesses could be removed from the Scottish economy. Financial SMEs need to tie down any new Scottish government on regulation to give them clearer guidelines.
Stay flexible over currency
More uncertainty over this issue means a waiting game for SMEs. Would a “yes” vote see Scottish SMEs using the euro, its own new currency, or continuing to have the British pound? The likelihood is some sort of currency union between the UK and an independent Scotland. The economies are almost inextricably interlinked. Scotland would risk being looked upon as a bad risk if they walk away from their share of existing UK debts.
The energy question
Yes vote campaigners point to the example of Norway’s financial strength in the wake of its oil harvest. Just how much oil is left under the North Sea? Even the experts can’t say for sure how many years it will be before the oil runs out. But the promise of being a nation rich in oil cannot harm small businesses throughout Scotland.
Scottish SMEs argue that they have missed out on grants since the mass cull of regional development agencies in 2011. Scottish Enterprise has already devolved. Such devolved, local power will give greater understanding of what is needed as regards Scottish smaller businesses. SMEs could also expect to benefit from larger kitties at exclusively-Scottish grant-dispensers’ disposal.
Do small businesses want Scottish independence?
The Federation of Small Businesses’ (FSB) remains neutral in the debate. Its poll of 1,826 members finds that smaller companies seem to be divided down the middle, but twice as many of them are pro-yes vote as bigger firms.