Economy: Growth

Lord McFall of Alcluith Excerpts

Tuesday 11th February 2014 Lords Chamber

[Lord Newby]

My Lords, there is increasing evidence from the business community that it believes that its involvement in the Scottish economy would be reduced were Scotland to become independent; for example, in recent weeks, Bob Dudley from BP has said that there would be “big uncertainties” about its continuing investment in Scotland. He is just one of a number of representatives of major firms who have questioned their long-term involvement in the Scottish economy if Scotland became independent.

[Lord McFall of Alcluith (Lab)]

My Lords, the SNP White Paper said that,

“Scottish taxes will fit our distinctive social context”.

That seems curious and inexplicable, but does the Minister agree that in terms of the social context the single market between Scotland and England is crucial, since more than 70% of Scottish exports go to England and any disruption of that market will result in instability and will not be in the interests of either Scotland or the rest of the United Kingdom?

[Lord Newby]

My Lords, I absolutely agree with the noble Lord. The Treasury has done some work on the so-called border effect: what happens to growth if the Scottish economy and those of the rest of the UK are separated by a border. Its best estimate was that over a period of several decades, the Scottish economy could be about 4% poorer than would otherwise be the case, compared to a reduction in the rest of the UK economy of 0.2%. There are much bigger risks for the Scottish economy through independence than there are for the rest of the UK, but both sides would suffer.