Report: Scottish currency could cost local firms £1 billion

Apr 04 2014, 03:13 IST
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SummaryIndependence could burden Scottish companies with more than 1 billion pounds ($1.66 billion) of extra costs, a report commissioned

Independence could burden Scottish companies with more than 1 billion pounds ($1.66 billion) of extra costs, a report commissioned by local engineering firm Weir Group said on Thursday, adding fuel to the business case against a split.

The 80-page report researched by forecasting and analysis group Oxford Economics found a new Scottish currency could cost local businesses and households 500 million pounds a year in transaction costs with a further one-off cost of 800 million pounds for the transition.

Scotland will vote on September 18 on whether it should remain part of the UK and business leaders have raised concerns over currency, tax, regulation and membership of the EU if the country gains independence.

The potential loss of the pound is one of the biggest fears for businesses in Scotland. All three main UK political parties have ruled out a shared currency despite this being the Scottish government's preferred option in light of a "yes" vote.

The report said a new, free-floating Scottish currency could have a more volatile exchange rate given Scotland's dependence on oil and gas and the financial sector. "For businesses, the conclusions seem clear: the costs of independence are guaranteed but the benefits are uncertain. That has the potential to make Scotland less competitive, not mo-re," Weir CEO Keith Cochrane said in a statement accompanying the research.

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