03 April 2014 09:15

Independence report

The Weir Group makes public a report into the potential implications for businesses in Scotland of the Scottish government’s independence proposals. 

The Weir Group PLC (Weir) is today making public a report it has commissioned into the potential implications for businesses of the Scottish government’s independence proposals. The analysis was requested following publication of the White Paper, ‘Scotland’s Future’. 

Weir, one of Scotland’s oldest and largest engineering companies, commissioned Oxford Economics to examine four key areas of the Scottish government’s proposals: currency and funding costs; implications for trade flows; taxation; and pensions. 

The 80-page report concludes that in these crucial economic areas, while Scotland’s economy could succeed under independence, the move would “create a number of costs and uncertainties, but fewer and more uncertain benefits”. Its findings include: 

  • Under any currency scenario, it is likely an independent Scotland would face: increased borrowing costs; increased taxes and significant public spending cuts.  All of which would have an impact businesses and households.
  • A new Scottish currency could cost Scottish based businesses and households approximately £500m a year in transaction costs. One-off costs of transition to the new arrangements could cost a further £800m.
  • Independence would bring greater policy making powers closer to the people of Scotland allowing policies like a cut in Corporation Tax to take place, but using the Scottish government’s assumptions, the payback period for this measure may be up to 15 years.
  • Higher yields on sovereign debt could reduce pension deficits and be a windfall for businesses in Scotland but other EU cross-border rules would mean UK-wide schemes split or companies forced to pay off deficits sooner than expected. 

Commenting on the report, Weir Group Chief Executive, Keith Cochrane said: 

“We have taken the decision to make this report public because we believe voters deserve access to well informed analysis ahead of September’s referendum. I support the Scottish government’s desire to make Scotland a more competitive place in which businesses can prosper but the report by Oxford Economics suggests that the current independence proposals may add substantial costs, at least in the short term and perhaps for many years to come.” 

“That is obviously concerning for anyone who wants to see the Scottish economy continue to succeed.  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.”      
                       

Contact details: The Weir Group PLC

 

Raymond Buchanan, Group Communications

 

Tel:  + 44 141 308 3781/ + 44 7713261447

raymond.buchanan@weir.co.uk

Brunswick Group

Tel:  + 44 207 404 5959

Patrick Handley / Nina Coad

 

 

About The Weir Group PLC

Weir is one of Scotland’s largest companies and a member of the FTSE 100 index. The Group was founded in 1871 and is headquartered in Glasgow. The Group is a global provider of engineering solutions to the minerals, oil and gas and power sectors and employs approximately 600 people in Scotland, contributing around £75m a year in salaries and procurement spending to the Scottish economy.

Weir is committed to going where our customers go, with a worldwide network of around 200 manufacturing and service facilities. The business has a presence in more than 70 countries, with over 15,000 staff working in three divisions; Minerals, Oil & Gas and Power & Industrial. Weir’s customer base includes the world’s largest mining houses, major oil services businesses and nuclear and conventional power generation companies.

Annual revenues were more than £2.4 billion in 2013 with profits before tax of £418m. A copy of the full report into the Scottish government’s independence proposals is available at weir.co.uk/independencereport

About Oxford Economics

Oxford Economics is a leader in global economic forecasting and quantitative analysis.  They were founded in 1981 as a commercial venture with Oxford University’s business college to provide economic forecasting and modelling to UK companies and financial institutions expanding abroad.

Since then, Oxford Economics has become one of the world’s foremost independent global advisory firms, providing reports, forecasts and analytical tools on 200 countries, 100 industrial sectors and over 3,000 cities.

Oxford Economics is a key adviser to corporate, financial and government decision-makers and thought leaders. Its worldwide client base comprises over 850 international organisations, including leading multinational companies and financial institutions; key government bodies and trade associations; and top universities, consultancies, and think tanks.