Even for businesses not exporting to or importing from Scotland directly, the public vote to reject independence (roughly 55%-45%) and stay with the United Kingdom this week is probably the most settling outcome for companies in the manufacturing and services industries, especially those in credit. Social fallout, Mel Gibson movies and romanticism aside, there were a number of significant economic issues that could have arisen with the birth of an independent Scotland.
One of interest for businesses would be that of the European Union reaction. Though the United Kingdom is not on the euro as a currency, the relationship between England and the EU is obviously a close one. This, along with the potential boost this could give populations notoriously unhappy with the nations they’re a part of (e.g., Spain and Italy), could persuade some decision makers of the EU to be recalcitrant to opening their arms to the newly independent state. That last thing the EU wants or needs during a slow recovery and problems to the east is more volatility. Scotland, in a case where it is neither on British sterling or the euro, would find itself with a currency held in nearly no regard internationally, which is far from safe territory.
There was an argument, perhaps a strong one, that Scotland’s gas and oil holdings could make it an eventual energy power in Europe and that alone was compelling business reason for the split from the UK. It is especially appealing, theoretically, in the long term when considering how much out-of-favor Russia supplies energy to EU nations, all while holding it over their heads during the disputes. However, in the short term, production and, even more so, distribution capabilities are nowhere near where they need to be to become such a player in the next few years. That would be somewhat unlikely until perhaps the 2020’s.
Finally, an independent Scotland would find itself scrambling to forge free trade agreements it doesn't have and, again, they almost certainly wouldn’t be getting much help from the UK or EU. As for an FTA with the United States, the American track record for quick passage and enactment of FTA’s, even ones that appear to be no-brainers, would rarely be described as anything but poor. Consider the still-languishing Trans-Pacific Partnership or near-decade of delays before completion of bilateral deals with South Korea, Panama and Columbia.That doesn't even factor in nations' complaints of the US, like most economic powers, pushing for lopsided trade pacts.
Though a few analysts predicting Scotland would rival a third-world country if suddenly independent may be presenting an overly harsh, worst-case scenario, the absence of change means international businesses don’t have add it to the already crowded list of global uncertainties at present.
- Brian Shappell, CBA, CICP, NACM staff writer