Finance Sector Move 'Still A Risk'

The risk that major financial institutions could move their headquarters out of Scotland still exists despite the No vote in the independence referendum, an economics expert has claimed.

In the run-up to the vote, pro-union campaigners had warned of the damaging impact a Yes vote would have on the financial sector, saying major banks and others would quit Scotland if it left the UK.

Jeremy Peat, a visiting professor at Strathclyde University, said threats by companies to relocate had been serious''.

With some independence campaigners hoping to see another referendum sooner rather than later, and with uncertainty over the UK's membership of the EU, Prof Peat argues this risk continues.

However he said that even if finance firms move their headquarters out of Scotland, the country could still keep hold of many of the leading jobs in the sector.

He said: It is clear that the risk of moving the legal headquarters did exist and still exists.

But I don't think that should be taken to mean that we necessarily lose the high-value, high-skill jobs that I am talking about.

We can retain those even if in the fullness of time legal headquarters from some financial sector companies move abroad.''

When asked about the risk that financial firms could move their headquarters away from Scotland, Prof Peat said: The risk continues broadly as it was in many ways.

If you're a financial service sector company selling products across the United Kingdom and there are risks that the regulatory environment will change in Scotland, that the legal environment will change, you may prefer to have your formal head office in London or elsewhere in England in order to sell products from an English base. But that doesn't mean we lose the skilled jobs.''

He added: All UK financial services companies will be worrying about the EU risk, if the UK were to leave the EU with so much of their market across the EU they might even consider whether a move out with the UK would make sense.

So yes the EU referendum is a substantial problem and it will not go away, none of these risks will go away over the next two or three years.''

Deputy First Minister John Swinney argued that independence would not have resulted in major changes in regulation for the financial sector.

He told the programme: The financial services sector has a formidable strength within Scotland and that is welcome to the Scottish Government and we work hard with the industry to make sure we capitalise on and build on that strength.

Our points that we made during the referendum campaign, where our proposal essentially was that we should work to maintain a financial services market across these islands, and as a consequence of that the financial regulation upon which Jeremy Peat attaches such importance would continue to be undertaken as it is currently undertaken today.

That was our position within the referendum and I'm happy to reaffirm that position.''

Mr Swinney also stressed Holyrood ministers are firm supporters of maintaining the UK's membership of the European Union''.

The Deputy First Minister said: We don't support the holding of a referendum on this question, which we think would be damaging to the sector and damaging to the Scottish economy as a whole.

So much of the regulation that applies to the financial services sector in Scotland doesn't emanate from London, 70% of it emanates from the European Union.

We see the advantages of Scotland being a full participant in the European markets and what the EU referendum as proposed by the Conservatives threatens to do is to jeopardise that direct relationship between Scottish companies and European markets, which these companies will say to you on any day of the week is very, very important for their interests and particularly for the regulation to be undertaken in a consistent manner.''