Scottish independence 'would be an economic disaster'

A leading investment bank has called for a "financially viable" Scotland should voters back independence in a referendum on Thursday.

Deutsche Bank has published an analysis of the possibility of Scottish independence and
The report, written by Deutsche Bank's chief UK economist George Buckley, examines possible implications for both Scotland and rest of the UK of a "Yes" vote in the referendum.

A note from David Folkerts-Landau, group chief economist at Deutsche Bank, argues that Scottish independence would be an all-time great blunder.

Related: Will Scottish independence spark more such movements?

The note published on Business Insider argues that a Yes vote would be a huge political mistake.

“Everyone has the right to self determination and to exercise his or her democratic rights. But there are times when fundamental political decisions have negative consequences far beyond what voters and politicians could have imagined. We feel that we are the threshold of one such moment. A “Yes” vote for Scottish independence on Thursday would go down in history as a political and economic mistake as large as Winston Churchill’s decision in 1925 to return the pound to the Gold Standard or the failure of the Federal Reserve to provide sufficient liquidity to the US banking system, which we now know brought on the Great Depression in the US. These decisions — well-intentioned as they were — contributed to years of depression and suffering and could have been avoided had alternative decisions been taken. “



If Scots vote yes to separation on Thursday, a clock starts ticking down to March 24, 2016 — the independence day declared by the Scottish government.

The Deutche Bank report has also speculated while there could be "capital flight" to the remaining UK, successful independence negotiations would be "in the interests of both countries".

The British and Scottish administrations have agreed that they will recognise the outcome of the referendum and appoint negotiators to work out the details of separation "in the best interests of the people of Scotland and of the rest of the United Kingdom."

But there is disagreement on many issues, and only 18 months to redraft laws, establish international agreements and work out relationships with international organisations.

Related: Why this will be a messy divorce

Deutsche Bank's report said the survey "found 8 per cent of firms have definite plans to move out of Scotland in the aftermath of a 'Yes' vote, and 10 per cent more said they would consider such a move".

The report said it would take years for an independent Scotland to rebuild what’s been built economically by the UK, “The economic and financial policy making institutions of Whitehall, as imperfect as they may be, have nevertheless created stability and certainty for private economic decision makers. Scottish consumers and investors have benefitted from the credibility of the Bank of England’s monetary policy, financial institutions and their clients have benefitted from an equally credible supervisory and regulatory regime, while foreign investors come to Scotland because they rely on a predictable investment environment. All of this comes from a united Great Britain.”