UK grocers warn independent Scotland faces higher prices

LONDON Mon Dec 9, 2013 7:27am EST

LONDON Dec 9 (Reuters) - Two of Britain's biggest grocers warned they may have to put up prices in Scotland if the country votes for independence in next year's referendum.

Wal-Mart's Asda, battling with J Sainsbury to be Britain's second largest grocer, and Wm Morrison Supermarkets, the No. 4 player, both cautioned on Monday that a yes vote at the Sept. 18 poll could mean higher food bills for Scottish consumers.

Most recent opinion polls suggest Scots favour keeping the 306-year-old union with England but the gap in support between the 'Yes' and 'No' camps is narrowing.

Britain's grocers currently absorb the greater costs of operating in Scotland, such as higher transport costs, into their overall UK businesses but some believe it would be unfair to continue to do so if Scotland were to become an independent country.

"The price customers pay for a pint of milk or loaf of bread is the same regardless of where they live in the UK," Asda chief executive Andy Clarke said of his business.

"However, the cost of doing business in different parts of the UK does vary and the powers given to the Scottish Parliament in the 2012 Scotland Act and any Yes vote in 2014 could result in Scotland being a less attractive investment proposition for businesses and put further pressure on our costs," he said.

His comments were echoed by Morrisons CEO Dalton Philips, who said: "If the regulatory environment was to increase the burden of the cost structure on business, that would potentially have to be passed through to consumer pricing, because why should the English and Welsh consumer subsidise this increased cost of doing business in Scotland?"

Tesco, Britain's biggest retailer, declined to say if it would raise prices, merely stating: "Our job is to create the best offer for customers whatever the outcome of the referendum."

A spokesman for Sainsbury's declined to comment.

Last month, the Scottish government unveiled its vision for independence, promising Scots they could forge their own prosperity but keep the pound and the queen if they vote to end the union with England.

That blueprint followed a report released by the UK Treasury that said independence would cost Scottish taxpayers an extra 1,000 pounds ($1,600) a year by the end of this decade.

Also, last month UK energy secretary Ed Davey warned Scottish consumers they faced higher energy bills if they opted for independence.

A spokeswoman for the Scottish government said there was no reason why retail prices in an independent Scotland would be any higher than at the moment.

"The Scottish government is already delivering the most competitive business rates regime in the UK, and our plans for an independent Scotland include proposals for lower corporation tax and for a fuel duty regulator to cut transport costs, meaning Scotland would be more competitive and less costly than at present."

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