If Scotland votes for independence from the United Kingdom in Thursday’s referendum, the price of your beloved Scotch whisky might just go up.
As part of UK, Scotland has access to its overseas missions where it sells its single malt, uses the stable pound sterling as currency, gets tariff-free export within EU and uses the bloc to negotiate trade and tax deals globally.
But if Scotland parts way with UK it may lose these benefits, which will have serious implication on its exports, supply chains, pricing and competitiveness in the multi-million dollar Scotch whisky industry.These teething problems could add up to a likely increase in the price of your beloved single malt.
Latest figures show that despite a 150% import tariff, Scotch whisky exports to India in 2013 was the highest-ever at £69 million. The Scotch Whisky Association holds India as a ‘star export performer’. India is the fourth biggest market for Scotch whisky by volume and 14th by value.
A report by SWA hoped that “EU-India free trade agreement negotiations would re-start following Indian elections, leading to a reduction of the onerous 150% import tariff”. But if Scotland votes for independence its EU membership is not assured.
“Even a temporary interruption of EU membership involving exclusion from the single market or the customs union, if this were a consequence of independence, would be damaging and difficult to manage,” chief executive of SWA David Frost said.
Scotland may lose the use of the pound sterling too. “The nature of an independent Scotland’s currency remains unclear and could affect our exports, management of supply chains, pricing, and competitiveness,” added Frost.
There is also concern over market access in the event of a pro-independence vote. The Scottish government White Paper envisages a network of just 70 to 90 overseas missions, but Scotch whisky exports to around 200 markets.
“The taxation regime also remains to be developed, and any regulatory divergence between Scotland and the rest of the UK may increase costs to businesses,” added Frost.