Scottish residents are about to vote on whether the country should become independent. The rest of the UK won't get a vote (even if they're Scottish!) but the outcome matters to all of us for practical not just emotional reasons.
The UK is currently quite a large (and very successful) single economic area with one currency, open access to all markets in the union, a single tax regime and many interconnected activities and businesses. I'm against the Euro because I don't believe there is a democratic mandate for the political union necessary for its success but the UK is a perfect model for the EU to follow if it does pursue a single currency. We are fundamentally one economy where the most prosperous areas support the least by unquestioned fiscal transfers.
Unlike Europe we don't need a banking union, as we've already got one. Two of our biggest banks (RBS and the HBOS part of Lloyds) are domiciled in Scotland and are currently being supported by the UK Government. I'm guessing an independent Scottish Government would have struggled to cope with the collapse of RBS and HBOS within the space of a few weeks. The seizure these banks would experience would crucify the British businesses that depend on them for funding. The credit crunch was bad enough within the context of the United Kingdom as a whole. In a divided kingdom it would have been something else again.
In the long term it seems unlikely that an independent Scotland would keep using the pound unless it could negotiate the ongoing currency union that Westminster leaders have rejected. The SNP claim that if they can't do this English businesses will face increased transaction costs of hundreds of millions of pounds each year.
It's worth remembering new joiners to the EU are obligated to join the Euro and (although the SNP will seek it) wouldn't normally have the opt-out Britain enjoys. Now I don't believe the Euro will prosper or even survive in the longer term but Scottish membership would obviously add further costs and risks to doing business there. They're not insurmountable but they certainly will be a drag on GDP north and south of the border.
Like many British companies, my former business RH Freight had a branch in Scotland and we had many customers there. This set up was easy to establish (just like a branch in England) and to maintain. Scotland does have some different laws (notably in property) but fundamentally we share a single legal framework. In a foreign country you would need to set up an overseas subsidiary, have separate financial accounts, file a Scottish tax return, account for Scottish VAT, run a separate pension scheme, operate separate bank accounts and thus payment and cash collection systems and comply with transfer pricing rules to ensure that the correct amount of corporation tax was paid in Scotland and the rest of the UK. If you had start up losses (we did) you wouldn't be able to offset them against your UK profits. How can these points not have a detrimental effect on British businesses currently operating throughout the UK?
If we do wake up to a yes outcome on 19 September I've no doubt that will cause considerable uncertainty. Even the forthcoming UK election will be odd because separation won't have occurred by then. So a new UK Government would presumably face re-election when independence happened as Scottish MP's would have to be ejected from the British parliament. Big questions would arise regarding our national debt and national assets. The instruments of Government which are inter-woven between both sides of the border would be have to be untangled, a complicated business.
So I've no doubt at all that Scottish independence would add to the costs and risks of doing business with Scotland and would create many uncertainties over the coming years. These matters are of great interest to business people south of the border.
Having said all that, the future prosperity of a separated Scotland and the remainder of the UK would depend on how those nations act in the future. Of course it's possible to imagine that both do well under their own steam in the longer term.
Finally, I'd like to declare my emotional bias, as I don't want to see the break up of the country of my birth. Maybe that's what matters most in the end.
Ian Baxter founded full service logistics provider Baxter Freight earlier this year. The company currently employs 60 people and is targeting £100m turnover by 2017. Previously Ian was the Managing Director and joint owner of The RH Group Ltd, a £135m international freight concern with 700 staff, until that company was sold in 2011.Suggest a correction