/ News / Would Northern Ireland be ready for an independent Scotland?

Would Northern Ireland be ready for an independent Scotland?

photo credit: via photopin cc
Rebecca Kincade on September 17, 2014 - 12:29 pm in In Depth

On the eve of the Scottish independence vote, a high level of anticipation has now spread throughout the United Kingdom. Just ten days ago everyone assumed that the ‘no’ camp would easily walk away with a victory and that an independent Scotland was never really on the cards. Now, however, people are paying attention.

With the release of several opinion poll results all showing a very narrow gap between those hoping to remain as part of the union and those hoping to ‘walk 500 miles’ in the other direction, businesses in Northern Ireland are watching to see what impact this could have on working relationships, corporation tax competition, currency, jurisdictions and trading links.

Corporation Tax

With a 3 per cent cut in corporation tax proposed, this is one of the key talking points for the business community in Northern Ireland. We only have to look a few miles down the road to see the impact that having a close neighbour with the ability to dictate its own corporation tax levels can have.

If Scotland is to do the same as the Republic of Ireland then we will be surrounded by two countries who are at a distinct competitive advantage when attracting global inbound inward investment. The fear is that this could lead to a company drain towards Scotland and a backwards step in the levels of foreign direct investment (FDI) we have welcomed in recent years.

A study that was conducted by Oxford Economics into the potential economic benefits of Scottish independence highlighted that Scotland was already performing better than the UK average in securing new FDI in 2012–13 (measured by the number of projects). As Northern Ireland’s corporation tax rate still has not been lowered, it is distinctly possible that Scotland could get there first.

With David Cameron, Ed Miliband and Nick Clegg all signing a joint agreement this week to guarantee more devolved powers to Scotland in the event of a ‘no’ vote, the chances are high that a change in corporation tax is likely to happen regardless of the outcome of the referendum. Northern Ireland will need to be prepared to go up against some stiff FDI competition in the wake of these changes. It will also be interesting to see how soon after this decision that a debate will take place for the devolution of a similar power to Northern Ireland, as an earlier vote was delayed to make way for the Scottish independence referendum.


In the event of a ‘yes’ vote, companies in Northern Ireland who do business in Scotland will be waiting to see if a deal can be done for an independent Scotland to keep the pound. The First Minister Alex Salmond has been pulled up for seemingly having no back-up solution to suit if sterling was no longer an option. He retorted in a debate with Alistair Darling that he had three strategies – that Scotland could have its own currency, a currency fixed to the pound or use of sterling. If England does not allow a currency union, with Mark Carney, Bank of England Governor, saying that a currency union would be “incompatible with sovereignty”, many others feel that the Euro remains in the background as the only logical fall-back position. In this eventuality, Northern Ireland would have a Eurozone country to the south and to the east.


70% of all Scottish exports are sold to the rest of the UK so it will be in the interest of an independent Scotland to make this business is easy as possible to maintain. It has been indicated that large companies would not be able to offset losses in Scotland against profits in the rest of the UK, even though the Scottish government’s proposal to cut corporation tax would mitigate this. Independence could also result in additional costs and complexity surrounding areas such as business pension schemes for companies hoping to set up a base here.

Border control

Passport checks when entering Scotland would be a barrier to smooth trade for exporters and traders trying to get into Scotland, and as yet it isn’t clear how this issue will be resolved.

The White Paper sets out a plan for a common travel area which would cover Scotland and the remaining parts of the UK, arguing that there would only be a need for border controls on the edges of the area, not within it.

An independent Scotland will need to take a more relaxed approach to immigration, with Alex Salmond saying that it would need to increase annual immigration to around 24,000 to maintain public spending. In light of this, the Westminster government could reject a passport free common travel area.


This is a vote based less on facts and more on emotion. The level of uncertainty surrounding key issues has been an unnerving factor for business owners both in Scotland and outside of it. If a ‘yes’ result does arise, there will be an 18 month window where clarity will be sought on all of these points. An independent Scotland would come into effect from 2016.

Perhaps in that time Northern Ireland could prepare itself to take on a new rival. Would we be ready?

independence referendum vote


Send Us A Message Here