The banks and companies telling Scots not to leave just keeps getting bigger.
Alex Salmond’s blueprint for separation suffered another body blow when senior economists at a leading global bank said they were “astonished” by his refusal to outline a Plan B on currency.
In a detailed analysis, Citigroup outlined a range of concerns over independence, and suggested a separate Scotland could have the same credit rating as Trinidad & Tobago. Its damning verdict emerged amid further signs of corporate unease over September’s vote, with a leading Scottish investment trust revealing that it is setting up extra companies in England because of the uncertainty caused by the referendum.
All 3 political leaders of the main parties havbe made it clear that the decision not to share the pound in a currency union was “final”. Why would we? It would saddle the rest of the UK with a economy in freefall.
Standard Life has warned it could quit an independent Scotland. Today Citigroup’s top economists and political analysts said a sterling monetary union was unlikely, and predicted a Yes vote would leave Scotland in a “relatively weak and risky fiscal position”.
Their paper added: “In our view, it is astonishing that the Scottish Government, in seeking independence, has reached this stage: seeking a currency union without agreement with the rest of the UK and without a clear alternative plan. The painful euro area strains make it clear that the set-up for the currency and monetary policy is crucial: it cannot be ignored or assumed to ‘be alright on the night’.”
The paper said there was nothing inherently implausible about independence, while highlighting three key areas of concern, including the currency issue. It also noted that North Sea oil revenues were falling and had pushed up the country’s fiscal deficit to around 8.3 per cent of GDP, which was above UK levels. And it pointed to Scotland’s large banking system, which might be “too big to save for Scotland alone if it came to that”.
Meanwhile, the Dundee-based investment company Alliance Trust became the latest firm to express major concerns over the referendum. It said it was creating companies registered in England, into which it could transfer activities, in a precautionary move because of uncertainty over the implications of a Yes vote on tax, financial regulation, currency and EU membership.
Katherine Garrett-Cox, chief executive of the firm, which also has offices in Edinburgh and London, said: “We are extremely proud of our 126 year Scottish heritage but I think the reality is you have to be very aware of the risks that your customers are facing and ensure you can provide certainty and continuity of services.”
She added that 80 per cent of the company’s clients were based in England and the impact independence was top of their “list of risks”.
Alistair Carmichael, the Scottish Secretary, urged voters to listen to what Scotland’s businesses are saying, adding: “Standard Life, RBS, Bank of Scotland, Aggreko, the Alliance Trust, BP and Shell are all warning that independence could mean higher costs and moving jobs and headquarters out of Scotland.
“It’s absolutely clear independence would be a big problem for Scotland rather than the solution, and not having any sort of currency plan makes it an even bigger problem.”
The CBI, the UK’s leading business organisation, joined the criticism, with Katja Hall, its policy director, telling the Scottish Government it “must” outline a Plan B on currency.
Simple question: do the Scots really want an economy like Trinidad and Tobago - no offence to our Caribbean friends but this is not where Scotland is right now. But independence would be a messy, painful and very expensive divorce.