Hopes that a single UK financial services industry could exist if Scotland becomes independent from the rest of the UK have been called into question by the Scottish Financial Enterprise.
SNP leader Alex Salmond is due to publish his Independence White Paper, outlining prospects for businesses and macroeconomics, ahead of the referendum in 2014.
The SFE is the privately owned representative body for financial services in Scotland. In what he calls an “industry observer’s perspective”, SFE chief executive Owen Kelly highlights the core issues of the case for independence for the single market of UK financial services.
At this stage, any questions raised can only be observations as the SNP’s ‘Yes’ campaign unfolds, but Kelly points out some of arguments for independence that already implicate a distinct impact for financial services.
Kelly highlights that some of the pro-independence campaign’s proposals to preserve parts of the single market for UK financial services clash with EU regulations.
The pro-independence campaign has put forward the idea that an independent Scotland could remain with the same financial regulator as the rest of the UK. However, Kelly points out that this does not fit with EU regulations stating that each member state must have its own distinct regulatory jurisdiction.
Kelly also questions the mutual benefit of maintaining this single market for both Scotland and the rest of the UK. He says: “There is no obvious benefit to the rest of the UK in bearing the risks and liabilities of regulating the industry of another member state.
“It seems unlikely that the Parliament in a newly independent Scotland would want to demit a function of government as important as financial regulation to the legislature of another country.”
Kelly goes on to argue that it is difficult to find an argument for a unique regulatory framework in Scotland from the facts presented by pro-independence plans.
He says: “The facts we can ascertain now about the regulatory framework suggest it would be difficult to negotiate some sort of unique arrangement for Scotland (and, by extension, the rest of the UK), when Scotland is one of the EU’s leading financial centres and London is the largest financial centre in the world.”
Elsewhere, the Confederation of British Industry in Scotland has published its own paper ‘The Scottish Government’s Independence White Paper – issues that business would like it to address’.