Global accounting firm says independence debate having “little or no effect” on Scottish investment


By G.A.Ponsonby
One of the world’s largest accounting firms has claimed that the possibility of a Yes result in the 2014 referendum is having very little, if any, effect on inward investment.
In a report just published, Ernst & Young have concluded that “any concerns over the prospect of independence and potential knock-on impacts on areas such as corporate taxation appeared to be having little or no effect on FDI [Foreign Direct Investment] decisions”.

The publication of the report has prompted the SNP to demand that UK Chancellor George Osborne and his coalition Treasury Chief Danny Alexander issue apologies after both claimed that the independence debate was causing damaging uncertainty that was hitting investment.

SNP Westminster Treasury spokesperson Stewart Hosie MP said not only had the UK Chancellor failed to produce any evidence to support, what the SNP MP described as scaremongering, but that there was now clear evidence to the contrary.

Ernst & Young’s latest UK Attractiveness Survey reports almost 6,000 positions were created in Scotland during 2011 – a 50 per cent increase on the previous year making it once again the UK’s leading location for FDI job creation.  The survey compares jobs created across the 12 nations and regions of the UK.

The Ernst and Young report echoes the findings on Channel 4’s renowned factcheck analysis which confirms that, outside London, Scotland is the leading destination in the UK for Foreign Investment creating more high value jobs in 2010.

The Channel 4 analysis also found that foreign investment in Scotland has continued to rise at a time when it is flatlining in other parts of the UK.

Mr Hosie – a Member of the Treasury Select Committee – said:

“After all the scaremongering, the only people causing uncertainty and harm to Scotland’s economy are George Osborne and Danny Alexander with their enthusiasm for cuts when they should be investing in recovery.

“The findings from the Ernst and Young survey show that Scotland continues to be the most attractive place in the UK to do business and that the great debate over independence is having no effect on FDI decisions.

“Osborne, Alexander, Moore and Cameron have been engaged in scaremongering of the worst kind. They have failed to produce any evidence to support their scare stories, and now there is clear evidence to the contrary.  The reality is that it is UK economic policy that is undermining inward investment and recovery.

“The evidence clearly shows that Scotland has the talent, the natural resources and the perfect location to build a strong and prosperous economy.   UK ministers and the anti-independence parties should drop their scaremongering and join the positive debate on Scotland’s future.”

According to the Channel 4 analysis, companies indicated no concerns over the possibility of Scotland becoming independent.

“Regarding a future Scottish referendum, at this stage, we are not worried,” said Doug Sawers MD of Human Resources firm Ceridian, who are to invest £16 million in new Glasgow offices.

Mr Sawers added: “In the event that the country chooses independence, we have faith in the Scottish Government’s approach to making Scotland more, not less, competitive. Recent news and speculation has not damaged Scotland’s and Glasgow’s prospects.”

The Swiss software company Avaloq said it chose Edinburgh primarily for its “large pool of highly qualified IT specialists”.  A spokesman for the company said: “We do not see any reason (to) and do not intend to adapt our model to any political evolution”.

Other businesses told Channel 4 that they already conduct business across borders and are used to “multiple jurisdictions and changes”.  At least one leading businessman, Jim McColl, claimed that constitutional change was in fact necessary if Scotland is to acquire the economic powers needed.

Mr McColl said: “What many of us are convinced about is that a productive and prosperous future for this country depends on securing real economic powers for the Scottish parliament through constitutional change”.

Where firms have indicated they may be winding back investment, it has been more often as a result of the UK Government’s austerity measures than anything else. 

In February this year, the National Australia Bank announced that it was reviewing its operations in the UK after abandoning hopes of a near-term economic recovery as a result of the Tory-Lib Dem Government’s austerity programme.

NAB chief executive Cameron Clyne said: “It is clear that the UK economy is likely to experience a much longer period of subdued growth with the ongoing sovereign debt crisis in the Euro-zone and the continuing austerity program by the UK government.

“UK GDP declined by 0.2% in the December quarter. These difficult conditions have adversely affected the performance of UK Banking.

“Given our view that recovery is now a longer term prospect, NAB has commenced a strategic review, and will work with UK management to appropriately reposition its business mix and structure for the changed economic environment and improve returns.”