Business view

WE CAN learn much from the Scottish independence referendum, regardless of its outcome. In many ways it encapsulates the current situation in Europe and the problems we face going forward.

1) It's all about the domicile. We grumble about asylum shopping, when asylum-seekers shop around for the best place to receive benefits, but companies do the exact same thing. A particularly troublesome issue in Europe is companies channelling sales through low-tax countries like Ireland. RBS has already announced it will move to London if Scotland declares independence. In RBS's case, they aren't worried about taxes, but the fiscal, monetary, legal and regulatory landscape. If countries don't make it easy for companies to do business, they will leave.

2) End of empires. For decades there has been a slow breakup of empires and multinational states. The first step was colonies gaining independence, and now it is regions seeking various forms of separatism. A desire for more local power is spreading around the world: eastern Ukraine, Kurds in Iraq, Catalonia, and Scotland, just to name a few. Expect this trend to continue, especially in Europe.

3) Hang on loosely, but don't let go. Although there is a trend towards political decentralisation, people don't want to go it entirely alone. There is more demand than ever for membership in supranational organisations. According to polls many Scots want independence only if they can be part of the EU. This is part of the evolution of nation, states and sovereignty.

4) Control your currency. Scots are more interested in independence if they can remain in a currency union with England, Wales and Northern Ireland. Nobel Prize-winning economist Paul Krugman wrote a furious attack on this idea, saying "the combination of political independence with a shared currency is a recipe for disaster." We know what happened to southern Europe under this scenario, but the Scots seemed to have forgotten.


David J. Cord
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