The Scottish Referendum: The effect on UK jobs

As with most communities in the UK this week, our attention has been focused on tomorrow’s independence referendum in Scotland. Whilst we are broadly in favour of a no vote, like Matthew Parris writing in The Spectator, our attitude towards Scotland has been soured somewhat by the tone of the debates, and the hectoring of the Yes Campaign in its incessant drive to batter the English. Our principal concern has been the effect on jobs.

Our analysis is that a yes vote will increase public sector jobs, but see a reduction in private sector jobs. Many functions of state undertaken in Westminster (and elsewhere in England) will have to be duplicated; an army of consultants will need to be employed to separate the technical functions of every government department. But private sector jobs are likely to fall, particularly in the banking and finance sector on which the Scottish economy is heavily dependent. RBS and Lloyds banks have already made public parts of their contingency plans to move their headquarters in the event of a yes vote, and it seems inevitable that further rationalisation of jobs would disproportionately hit an area no longer their home. Ironically, independence would likely only increase London’s dominance, and not reduce it as sought by the SNP.

The Currency Problem

The SNP’s failure to adequately address the issue of currency is perhaps of greatest concern. Whilst it is just conceivable that Cameron, Miliband et al may withdraw their assertion that they will not allow a currency union, it is highly unlikely that they will. The currency options for an independent Scotland, therefore, are quite unpalatable, and will result in Scotland having a much weaker currency – and, if they join the Euro, much more vulnerable to wider market problems. This is likely to reduce inward investment, and inhibit job creation.