IoD ‘relaxed’ about independence

Simon Walker, who took over as director general of the Institute of Directors this month, is also set to use a conference in St Andrews to call for the UK government to go further with its controversial austerity programme.

Speaking to Scotland on Sunday ahead of Friday’s meeting, Walker said he was relaxed about the possibility of Scotland becoming independent.

He cited the example of lower corporate taxes in Ireland that could be replicated in Scotland to the advantage of the business community.

“It’s for the people of Scotland to decide,” Walker said. “If they want independence, I’m sure business will adjust. If it leads to the sort of tax competition that has made Ireland such a magnet for inward investment, so much the better.

“The fiscal implications [of independence] are uncertain but they probably do mean a much smaller state.” Walker said a smaller independent state of Scotland would “need to operate a conservative fiscal policy”.

More restrained public spending would be needed to create a buffer against the risk of big deficits when oil prices are low, he argued.

Walker, who upon his appointment called for an extra £50 billion of quantitative easing, welcomed the Bank of England’s subsequent £75bn cash injection into Britain’s economy this month to take the total programme up to £275bn.

However, the IoD boss said he believed the economy could take a further £25bn of stimulus, and also called for the austerity programme in the UK to be deepened between now and 2019.

“The assessment made in the last round of QE was that it added slightly more than 1 per cent to growth levels. We feel a further hike is needed. If QE ended up at £300bn it would be about the right quantum.”

Walker believes deeper austerity cuts are needed overall, and would like to see government spending as a proportion of UK GDP slashed to 35 per cent by 2020. That compares to a ratio of up to 45 per cent in recent years and a targeted 40 per cent by the end of this Parliament.

“I’m not suggesting greater austerity cuts right now, we are talking an eight to nine year timeframe. But sign-posting of the direction is needed. Getting down public spending is something the government needs to do better.”

Walker, a former chief executive of the British Venture Capital and Private Equity Association, will also tell Scottish IoD members – of which there are nearly 1,550 – that Britain cannot afford its demanding green energy credentials in the current depressed economic climate.

He said: “Those targets were possibly appropriate in an era of affluence. We set carbon emission reduction targets much higher than the rest of Europe. That’s now an inappropriate policy.”