The admission by the Royal Bank of Scotland that in the event of Scotland voting to leave the UK, it would have to leave Scotland and move its headquarters to England confirms something that’s been known for a long time.
Inside the UK, Scotland has unrivalled access to the wider UK market.
But in the event of independence, creating a hard border between Scotland and the rest of the UK, the opportunities would be reduced dramatically.
Nowhere more so than in banking and financial services, as RBS has just confirmed.
The Royal Bank of Scotland remains a hugely significant UK financial institution, but could not continue to service its huge UK and global customer base while headquartered in an independent Scotland.
It has a very large balance sheet, and needs to be part of the UK regulatory and Financial Services Compensation Scheme framework.
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That is why independence means that after more than three centuries, the Royal Bank of Scotland would leave Scotland for London.
It would not be alone, and thousands of Scottish jobs – including many well paid, senior positions – depend on RBS and other finance companies. These are jobs Scotland cannot afford to lose.
Scotland is deeply integrated into the UK economy, and in particular into its currency and banking systems.
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The Financial Services Compensation Scheme protects ordinary savers’ deposits even in the case of a bank or other financial institution gets into trouble.
This is funded by a levy on all UK institutions, but ultimately has the safety net of UK Government funding.
In the financial crisis of 2008, the UK Government had to step in, funding not just banks like RBS, but the compensation scheme overall.
An independent Scottish government would simply be unable to afford that, and that’s why the Royal Bank – founded in Scotland shortly after the union with the UK – would have to leave Scotland.
And of course this is only about the banking and financial sectors.
Sixty per cent of Scotland’s trade is with the rest of the UK, and as a recent LSE study showed, erecting a border between Scotland and England would be much more damaging for Scotland than Brexit, and the economic downside of independence could not be offset by re-joining the EU.
What this shows us is that the UK and Scotland within it are stronger together rather than apart, economically, as in so many other ways.
It also shows the complete lack of an SNP economic plan for leaving the UK.
So Scottish businesses like RBS have to make their own plans – and that means leaving the country they were founded in.
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Nicola Sturgeon wants a referendum on independence before she has even tried to calculate its economic effects.
Instead of constantly demanding a referendum that most of the country doesn’t want just now - in doing so destabilising the companies like RBS that Scotland depends on for employment and economic development - the SNP should acknowledge the strengths of the economic union with the rest of the UK, and concentrate on recovery from the present pandemic, rather than political grandstanding at the expense of Scottish businesses and jobs.
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