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Our Research

Independence Uncovered: The Economic and Social Impacts of Scottish Independence

26 February 2023

For many years now, debate has raged about the economic implications of Scottish independence. The 2014 referendum focused on issues such as the currency an independent Scotland would use, its initial financial position and new trading arrangements.

These questions have been frequently reassessed. The Government Expenditure & Revenue Scotland (GERS) report provides an annual update on Scotland’s fiscal position relative to the UK as a whole, triggering an almost ritualistic exchange between those on different sides of the constitutional debate.

Trade, energy, defence, welfare, pensions, EU membership, the financial sector, monetary policy and the currency are also regular topics for discussion. Good quality data is collected, and thorough analysis is undertaken in many of these areas. However, at no stage have the issues been aggregated to produce an overall analysis of the likely economic and social impacts of independence.

This study helps to fill that gap. It uses modelling techniques and data widely accepted by economists in Scotland and elsewhere. This ensures that the approaches and data used are as uncontroversial and as informative as possible. Commentators on both sides of the debate have accepted the validity of the main components of this analysis, though no doubt some may contest its overall conclusions.

  • This report considers the three major factors in the economics of Scottish independence in turn, with a fourth section covering a variety of other considerations:
  • Currency arrangements in an independent Scotland;
  • The fiscal position;
  • Trade;
  • Other measurable impacts including defence savings; impacts on the financial sector and
    defence procurement; loss of support for the renewable energy sector and the set-up costs
    of new government departments.
Read ‘Independence Uncovered’ from SBUK

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The Union beyond Covid-19: A strengthened basis for business resurgence

October 2020

For too long, the success of businesses in Scotland has been held back by the Scottish Government’s relentless drive to break up the United Kingdom. Notwithstanding the challenges posed by Brexit, separation from the UK has been by far the biggest political risk factor that companies operating in Scotland have faced in the last decade.

Now that COVID-19 has severely impacted the economy, it imperils our recovery too. And while there may ultimately be a case for additional powers for Scotland in the future, the immediate priority must be broader rethink of how HM Government interacts with and benefits the devolved regions as the economy returns to growth again. Moreover, ways must be considered to make this activity more visible to the public, so that direct and unambiguous connections can be drawn between the activity of HM Government and positive effects within the communities it is tasked with supporting.

The Union beyond Covid-19: A strengthened basis for business resurgence

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Strengthening The Union – A framework for business success

February 2020

For too long, the success of businesses in Scotland has been held back by the Scottish Government’s relentless drive to break up the United Kingdom. Notwithstanding the challenges posed by Brexit, independence is by far the biggest political risk factor that companies in Scotland face. Moreover, ways must be considered to make this activity more visible to the public, so that direct and unambiguous connections can be drawn between the activity of HM Government and positive effects within the communities it is tasked with supporting.

Strengthening The Union

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Local Analysis – How Dundee’s economy benefits from Scotland’s place in the UK

May 2019

Dundee, Scotland’s fourth largest city, has an important place in Scotland’s economy, accounting for about 4% of economic output. The city has major opportunities for business and economic growth. Highlights include a growing and successful tech sector, the redevelopment of the waterfront and the opening of the V&A museum, which heralds a cultural renaissance. In the November 2018 budget, the UK government confirmed a £150m investment in a Tay Cities Deal in partnership with the Scottish Government to trigger £350m in total – a good example of devolved, local and national institutions working well together.

Local Analysis – Dundee

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Local Analysis: How Glasgow’s economy benefits from Scotland’s place in the UK

November 2018

Glasgow benefits greatly from Scotland’s place in the UK according to our latest analysis of official data

The analysis shows that 16% of Glasgow’s economic output is attributable to Scotland’s place in the UK.   The city remains a major beneficiary from Scotland’s place in the United Kingdom driven largely by growing and successful financial, IT, life science and engineering sectors. The report estimates that Scotland’s place in the UK boosts the Gross Value Added (GVA) of Glasgow by circa £3.3bn and supports more than 67,000 jobs.

The City is also benefitting from a £1.13bn city deal which is investing in infrastructure, life sciences and innovation over a twenty year period, designed to increase the gross value added of the area by 4% – a good example of devolved, local and national institutions working well together.  Glasgow’s key industries such as shipbuilding, advanced engineering and distilling also benefit from unrestricted access to UK markets.

Yet despite these positives, Glasgow’s economy differs significantly from other parts of Scotland which make its exposure to risk from Scotland’s departure from the United Kingdom all the greater.  These include:

  1. A higher proportion of Glasgow’s economy (25%) consists of public administration – including health and education – than the Scottish average (21%).  This means that Glasgow benefits disproportionately from the Union Dividend (higher public spending in Scotland) and other fiscal benefits that the UK brings. An independent Scotland would begin life with a large fiscal deficit, meaning that large cuts to public spending would be necessary.
  2. The city’s financial sector is 50% larger than the Scottish average and so the city benefits disproportionately from the UK’s regulatory framework. The sector is focussed on a UK client base and many Scots financial firms would need to move operations south of the border to remain within the UK financial framework. This would have a major impact on Glasgow. Of course, all Glaswegian businesses benefit from the lower interest rates and currency stability that Sterling brings.
  3. Overall, the Glasgow economy which consists largely of the financial sector, business services and manufacturing, is more export-oriented than Scotland as a whole.  Removing the benefits of unfettered access to the UK single market would have a profoundly negative impact on Glasgow and Scotland.
Local Analysis

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WIN WIN – The business case for Scotland’s place in the UK

September 2018

As part of the United Kingdom, Scotland has the potential to become one of the best places in the world to do business.

In this paper we demonstrate, using analysis based on official data provided by the Scottish Government, the Office of National Statistics (ONS) and the official EU data service (EuroStat) how Scotland and Scottish business benefit as full partners in the United Kingdom. This includes the Government Expenditure and Revenues Scotland (GERS) dataset, an annual assessment of tax and spend in Scotland compared to the United Kingdom as a whole, which is carried out by Scottish Government Statisticians.

Notwithstanding the ongoing dual constitutional debate about Scotland’s place in the United Kingdom and Brexit, Britain as a whole is a stable and benign business environment which is highly attractive to global investors. Scotland’s place in the United Kingdom allows business here to share in key United Kingdom advantages such as its large and integrated single market and sophisticated monetary regime.

Read ‘Win – Win’ from SBUK

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Speaking up for business

  • Scottish Business UK provides one of the most important voices in support of Scotland’s place in the UK in the continuing debate over Scotland’s constitutional future. They offer a real and frank assessment of the impact on business, that even the threat of a second referendum represents. Their analysis is sober, evidence based and compelling. I’m glad they’re on our side.
    — Alex Cole-Hamilton MSP, Leader, Scottish Liberal D...
  • Scotland’s focus must be on Covid recovery, not a second independence referendum. Employers have suffered throughout the pandemic and the last thing they need is more uncertainty. We must focus on what unites us, not what divides us. Scotland’s best days are ahead of us, and Scottish Business UK plays a vital role in representing and speaking up for businesses which will be at the heart of the future we build together.
    — Anas Sarwar MSP, Scottish Labour leader
  • Scottish Business UK provide a powerful voice for the business community who value our economic, social and family ties across the United Kingdom.  It is important that all voices are heard loudly and clearly to make the positive case for a strong and caring united Kingdom.

    — Former Scottish Lib Dem Leader, Willie Rennie MSP
  • Scottish Business UK understand that for our economy to flourish we have to work together across all parts of our United Kingdom. As people who are running businesses and creating jobs, they see clearly that the politics and grievance and division are putting the brakes on progress. I am a strong supporter of the great work they do to speak up for business and champion the UK.
    — Alister Jack MP, Secretary of State for Scotland
  • Day after day I hear from business owners who tell me their businesses are at breaking point due to the pandemic. What they ask for and what they need is for the Scottish government and the UK government to work together to support the economy and protect jobs. What they don’t need is more uncertainty, division and upheaval. Scottish Business UK has a vital role to play in giving those businesses a voice and making the positive case for cooperation across the UK family of nations.
    — Ian Murray MP, Shadow Secretary of State for Scotl...