| LONDON, April 3
LONDON, April 3 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 Sept. 18 on whether it should remain
part of the UK and business leaders have raised concerns over
currency, tax, regulation and membership of the European Union
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 more,"
Weir Chief Executive Keith Cochrane said in a statement
accompanying the research.
"We believe voters deserve access to well informed analysis
ahead of September's referendum," Cochrane said, explaining
Weir's motivation for publishing the report.
Scottish First Minister Alex Salmond says an independent
Scotland would benefit as its government could take charge of
its own finances, raising taxes and spending revenues from North
Sea oil and gas to ensure its own prosperity. It would also, he
argues, keep the pound.
The Oxford Economics report did highlight some potential
benefits arising from an independent Scotland, mainly that
greater policy making powers could help local businesses via a
reduction of corporation tax.
But it said that "using the Scottish government's
assumptions, the payback period for this measure may be up to 15
"An independent Scotland is likely to need to tax Scottish
business overall more heavily than if it remained in the UK,"
the report added.
Glasgow-based Weir employs 600 people in Scotland and has
its roots in manufacturing pumps for Victorian steamships. One
of Scotland's oldest and largest engineering firms, it now
supplies pumps and valves for the mining, oil and gas sector.
Executives from several British companies have weighed into
the Scottish independence debate, including oil majors Shell
and BP and financial services firms Royal Bank
of Scotland, Standard Life, and Barclays
($1 = 0.6012 British pounds)
(Editing by Tom Pfeiffer)