James Ashton: If Scotland breaks away we will end up having to pay

A Yes vote would be only the beginning. A newly independent Scotland would need to work out its standing in the world, forge new trade relations and count the cost of raising its own debt without any financial track record. None of this is conducive to business decisions getting made. Big employers don’t like it. Over summer, savings group Standard Life, a bastion of Edinburgh’s financial services industry for almost two centuries, moaned that it knew little more about what independence would mean for jobs, currency, regulation and taxation than it did when it published its annual report six months earlier.

The calibre of independence doubters should be ringing alarm bells — especially as the key question of currency is still unresolved. Goldman Sachs flags the “severe consequences” of a currency crisis for the UK. Last month, Sir Andrew Large, the former Bank of England deputy governor, and ex-Prudential chairman Sir Martin Jacomb argued that a currency union was not compatible with political independence because if the Scottish economy deteriorates, Holyrood will not have the levers to regain competitiveness through currency devaluation. Read across from the economic woes of the Club Med countries.

Nor would Scotland have influence over interest rates and it would need to build up its own multibillion-pound currency reserves. Add in the proclamation from Olli Rehn, vice-president of the European Parliament, who said this week that Scotland should not be able to keep the pound without Westminster’s consent, and the uncertainties just keep coming.

Compare that with the have-our-cake-and-eat-it brigade, led by Sir George Mathewson, the former Royal Bank of Scotland chairman and Fred Goodwin’s mentor. He believes Scotland should be able to keep sovereignty of its banks without paying for a future clean-up, which should be borne south of the border because that is where most of the banks’ activities lie. Others aren’t so sure, as both Vince Cable and Bank of England Governor Mark Carney suggested that RBS might have to repatriate south.

The City would hardly suffer. Most of those great Scottish financial institutions are at least half-run from London anyway. To keep plugged into international markets, they will not retreat to Edinburgh.

But which direction the Scottish economy takes post-independence is harder to divine. A little more than two years ago, I hosted a debate on Scottish independence for Scottish law firm Tods Murray at which Jo Armstrong, an independent economist based at Glasgow University Business School, lamented that the economic data was not detailed enough to paint an accurate picture. Not surprisingly, Scotland has striking similarities to England’s economy but it is less diverse and would lean heavily on financial services and the North Sea oil tax receipts that are handy in narrowing Britain’s current account deficit but are inherently volatile.

If Scotland transforms into a high-growth, low-tax nation, aping the accrued wealth of Norway, good luck to it. The risk comes if it encounters some kind of financial difficulty. Here, independence could start to look like a foolhardy experiment for which someone else will have to pick up the tab.

When Britain sent a cheque to Ireland as part of its bail-out in 2010, George Osborne declared it was “overwhelmingly in Britain’s national interest” because of Ireland’s status as a leading trading partner with an “interconnected” banking system. And this for a country that forged an independent path close on a century ago.

Beware the moral hazard that a breakaway Scotland brings. If it stumbles, London would have to pick up the pieces. The economic risks associated with going it alone are arguably higher south of the border than north of it.