Approximately 300 days remain until the morning of the 18th of September, 2014, when Scots will decide on their constitutional future. While the political debate is picking up momentum, thus far the focus has been on such issues as constitutional scenarios, debt shares, monetary policy, EU membership, fiscal performance, oil revenues, tax contributions and structure, defence arrangements and so on, but little attention has focused on business itself. Yet, the health of the business community is fundamental to the health and prosperity of the economy, and society, as a whole. The current constitutional debate presents an opportunity to discuss, regardless of the referendum outcome, how an environment that is competitive for business and creates wealth can be created.
This is at the heart of this current study into how constitutional uncertainty is influencing business decision-making in Scotland and the United Kingdom. With notable exceptions, business leaders have been reluctant to ‘stick their heads above the parapet’ and take part in such a debate. This is understandable given that businesses have stakeholders, be they customers, board members, employees, shareholders, suppliers or governments, on both sides of the discussion. Moreover, all too frequently within the debate reason has given way to emotion and political ideology has become confused with business decision-making. And while business leaders, quite rightly, are keen to stay politically neutral – publicly at least – focusing their attention and decisions on their business interests, there is also an opportunity to outline what sort of business environment is needed in Scotland and the United Kingdom to stay competitive in a globalised world.
The uncertainties created by the constitutional debate vary across sectors. Such uncertainties might include access to markets, currency fluctuations, skilled labour, tax structures, research and development (R&D) incentives and regulatory regimes. What uncertainties influence individual businesses might depend on whether customer bases are located inside Scotland, the United Kingdom, Europe, or more broadly, the world. It might also differ depending on whether ownership structures of businesses are domestic or international, whether they have their head office in Scotland/the UK, or they are a subsidiary, whether they are a small, medium or large business, whether they operate in highly regulated or loosely regulated industries, whether their labour force is highly skilled and mobile, or whether they are in global or regional industries. While uncertainties present risks to businesses, which business must mitigate by the decisions that they take, they also present opportunities for rethinking business-level strategy.
The risks and opportunities that are a result of the uncertainties created by the constitutional debate will impact in greater and lesser degrees on individual businesses and sectors, manifesting in diverse ways. What all businesses have in common is that, whatever the result on September 18th, businesses will take decisions based on whether the changes that will inevitably take place no-matter what the referendum outcome maintain or improve a business environment that is conducive to business growth. It is, therefore, incumbent on business leaders, policy-makers and the public to take this opportunity to have a mature debate about how to continue to foster a business environment that is competitive, wealth creating and contributes to the prosperity of all.
Professor Brad MacKay and Veselina Stoyanova