Scotland Analysis Programme

Vince Cable Excerpts

Tuesday 2nd July 2013 Written Statements

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

The Government have today published the fourth paper in the Scotland analysis series to inform the debate on Scotland’s future within the United Kingdom. Copies will be placed in the Libraries of both Houses.

“Scotland analysis: Business and microeconomic framework” examines how the UK’s business and economic framework supports the large domestic market across all parts of the UK, and the implications of a vote for independence on employers, workers and consumers.

The analysis shows the strong trade links between Scotland and the rest of the UK. In 2011 Scotland sold goods and services to the rest of the UK worth £45.5 billion, double the levels exported to the rest of the world and four times as much as to the rest of the European Union. Sales to the rest of the UK represented 29% of Scottish GDP in 2011; exports to Scotland represented 3.5% of the rest of the UK’s GDP.

The UK has a “true single market”. This is underpinned by one common set of business regulations that serve the entire UK market and which rank well internationally. Access to this market and a highly skilled UK-wide work-force helps Scotland remain an attractive destination for foreign direct investment.

In the event of a vote for independence, introducing an international border of whatever form will create a barrier to the free flow of goods, capital and labour. This will be to the detriment of firms, workers and consumers in both states and risks making it more challenging to attract overseas investors. Creating new rules, regulatory systems and institutions–for example to replace key UK regulatory institutions such as HMRC, Companies House and the Intellectual Property Office, which would operate on behalf of the continuing UK as before–would create uncertainty, additional costs and confusion for businesses and investors operating in Scotland. Small companies with little cross-border experience would be hampered most.

The analysis concludes that Scotland’s integration within the UK’s domestic market brings benefits to all. The size and scale of that market brings opportunities to trade, move jobs, collaborate to develop new and future technologies, travel and communicate with each other efficiently and benefit from economies of scale. In the event of a vote for independence, the bodies that support the UK in its present form would continue to undertake their functions on behalf of the reminder of the UK. Experience from Europe shows a single market between two separate states is not the same as a fully integrated domestic market.

The paper published today follows the Government’s paper outlining the financial services and banking implications of independence, published on 27 May. That paper demonstrated that as part of the UK, Scottish firms and individuals benefit from a world-leading financial services sector.

The paper concluded that this position would be put at risk if Scotland were to become independent, fragmenting the market and the bodies that have been put in place to protect customers, creating additional difficulties and costs for households and businesses, as well as for financial services firms themselves.

Future papers from the Scotland analysis programme will be published over the course of 2013 and 2014 to ensure that people in Scotland have access to the facts and information ahead of the referendum.