Referendum 'leading to economic uncertainty', says report

Scottish and UK flags
Image caption Scottish votes will decide whether or not remain in the UK in September

Uncertainty over Scotland's future is holding back its economy, which is under-performing compared to the rest of the UK, a new report has claimed.

The Better Together campaign says it shows that those backing a yes vote in September's referendum have failed to answer key economic questions.

But research firm Capital Economics' findings have been criticised by the Business for Scotland group.

It says the economy has improved in the lead up to the referendum vote.

Tony Banks, who chairs the pro-independence business group, said: "I wonder what Capital Economics thinks was holding Scotland's economy back before the referendum campaign started, because it's doing better now than it was before 2007.

"Inward investment is at a 16-year high, economic performance is back above pre-recession levels, there's record employment and Scottish businesses are getting stuck into the many opportunities that are coming our way.

Biggest fears

"And there will be many more opportunities when Scotland has the full economic powers of independence."

Quoting a survey this month by top financial advisor Deloitte, Mr Banks said the biggest fears for businesses were related to the result of the next UK general election and the risk of leaving the EU depending on who rules the Westminster government.

Capital Economics suggests that, if September's referendum results in a vote to stay in the UK, a period of where it out-performs the UK economy "may swiftly follow as activity and investment that was postponed due to uncertainty about Scotland's future is undertaken".

In its most recent UK Cities and Regions paper, the economic research company with bases in London, Toronto and Singapore, said: "It has become clear that uncertainty about Scotland's future inside the UK is weighing on its economy."

While figures this week showed the Scottish GDP was up by 1% in the first quarter of 2014, the report said "this largely reflected a bounce-back from a weak performance" in the previous three months, adding that the annual growth of 2.6% "remained below the UK's 3%".

'Weak employment'

Other indicators also suggest "output has grown more slowly in Scotland than in any other region of the UK for the third month in a row", adding this was "perhaps reflecting concerns about the looming independence vote".

It also pointed out the unemployment rate north of the border had risen to 6.9%, arguing that the growth in employment "appears largely down to weak employment a year ago".

Meanwhile, the strength of the housing market recovery is "unclear", with the report noting that, according to the Office for National Statistics, house prices had fallen for the second month in a row in May.

Labour MP Ian Murray, speaking for the pro-UK Better Together campaign, said the report "confirms that first minister Alex Salmond's failure to answer key economic questions about the consequences of separation is having a negative impact on Scotland today".

"Whether it's the failure to tell us what would replace the pound if we left the UK, or the head in the sand approach to having to re-apply to join the EU, the Nationalists simply aren't credible on the economics of independence," he said.

"Firms in Scotland have barrier free access to a UK single market of more than 63 million people rather than just five million people in Scotland. Where is the sense in creating a barrier between Scottish businesses and their customers elsewhere in the UK?"

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