Businesses in cities such as Newcastle fear they will miss out as Scotland is promised financial incentives to stay in union
Experimental feature

Listen to this article

Experimental feature

Warnings from some Scottish businesses that they would consider relocating to England if there is a Yes vote for independence have raised hopes of a knock-on benefit in the English region closest to the border.

Northeast England has previously lost out to its northern neighbour in attracting inward investment because of Scotland’s greater financial firepower. However, proximity to Scotland could now offer the chance to woo Scottish businesses wanting an English base.

“A Yes vote in Scotland would give us the direct opportunity to take a new potential market,” said Nick Forbes, leader of the city council of Newcastle, the nearest English conurbation. “In the event of a Yes vote we would be making an active pitch for them.” He said excellent universities, available business space and a much lower cost of living than London are among the attractions of his region.

Newcastle is already the operational HQ for Virgin Money, which also has senior management based in Edinburgh and London. “We don’t have a need for a contingency plan because we are registered in England,” it said.

James Ramsbotham, chief executive of the northeast Chamber of Commerce, said the possibility of relocations had aroused interest. “Most local authorities have the welcome mat out.” But he expected London to be the magnet for big Scottish financial sector firms.

Among northeast property professionals, the potential for Yes vote-induced relocations is a hot subject. “We wouldn’t be doing our job if we hadn’t been thinking about that,” said Fergus Trim, director of the Quorum business park on the edge of Newcastle and North Tyneside.

Three years ago Quorum suffered the region’s highest-profile loss of an inward investment project to Scotland when Amazon, the online retailer, set up a 900-person customer service centre in Edinburgh following a £1.8m grant from Scottish Enterprise. This exceeded what northeast England could muster.

Quorum, a near-1m sq ft business park with Tesco Bank among its occupants, has won tenants due to “northshoring” – moving up from the south of England. Its attractions for Scottish businesses moving south include skilled workers, low property costs and Local Enterprise Partnership funds, said Mr Trim.

But, he stressed, a Yes vote would raise for the north east “the challenge of being the northern frontier for rump UK”. With Scotland now choosing between independence or remaining in the union with additional powers, the north east will need more powers too, he said, not only to attract businesses, but to retain those it has.

And Kevan Carrick, partner in northeast based JK Property Consultants and regional spokesman for the Royal Institution of Chartered Surveyors, stressed that Scotland was already gaining new tax powers, even before this week’s vote.

“Whichever way it falls the regions of England have to be a lot more competitive to attract inward investment and create jobs,” he said.

Copyright The Financial Times Limited 2018. All rights reserved.