Thursday, 18 September 2014

Scottish Independence: INFLATION INCOMING?


So today's the day- the final installation of our short series on Scottish Independence is here.
Oh, and it's the Scottish referendum today.

If Scotland are to become independent a great argument of the 'No' campaign is that Scottish consumers would be hit by increased prices, for everyday goods and luxury items alike.

This could have pretty bad consequences, and it is certainly possible that these increases will come in the event of independence. Recently the Chairman of the John Lewis Partnership (John Lewis and Waitrose) Charlie Mayfield claimed a Yes vote would have consequences because of the apparently higher cost of trading in some parts of Scotland, causing prices to rise in their stores.

Supermarkets Sainsbury's and Asda have also claimed they would raise their prices, citing potential increase in costs that would occur, as technically they would have to adjust to trading in a foreign country, without being at the cost of the rest of the UK. Morrisons have also stated similar claims; though apparently they have kept open the possibility of even lowering prices if possible.
Many supermarkets claim to already have lower profit margins in Scotland due to its more spread out, rural nature- transport costs are presumably higher due to how far Scottish cities such as Aberdeen are from distribution centres.

Tesco have remained impartial on any potential consequences of the referendum on prices; though perhaps this is partly due to their unwillingness to risk backlash after their recent profit troubles rather than a commitment to not increase prices.

This seems to be a clear warning from some major businesses to the Scottish 'Yes' party, but will they really follow through?

It is certainly a possibility that this is part of the large scare policy being used by the 'Better Together' campaign- rumours are abound that these statements have been made upon special request by PM David Cameron, whose job would be in huge jeopardy in the event of a Scottish Independence.

Nevertheless, could the aforementioned businesses really raise their prices after Independence?


Inflation from the major supermarkets could serve to the benefit
of the likes of Aldi and Lidl.
Take the supermarkets- already we have seen in recent years the rise of the value-driven Aldi and Lidl , and supermarket price inflation could really make a field day for the bosses of these countries.
Aldi has steadfastly refuted any claims that they would raise prices after Independence: they cited their existence in 18 markets and how they are already adaptive enough to adjust to an Independent Scotland with no price increases.
So what will happen if Sainsburys and Co. increase their prices? Well it seems natural that even better value would drive customers to the budget supermarkets Aldi and Lidl, certainly bad news for the big supermarkets.

So what we are hearing from the supermarkets could certainly be simple another scare tactic from the 'No' campaign. If they are to follow through on their claim to inflate prices, it could really cost them even more customers to the already threatening value-driven competitors such as Aldi and Lidl.

Sources for this article can be found linked within.
Mohammad Lone Editor