Business

Ex-Sainsbury's boss Justin King in Scotland vote warning

Justin King Image copyright Sainbury's

The former boss of Sainsbury's supermarket has issued a strong warning about the costs for retailers of doing business in an independent Scotland.

Justin King told the BBC supermarket prices would rise, retailers would put investment on hold and that Scottish food producers could be hit.

The John Lewis group and Asda have also said their prices may rise due to the increased cost of trading in Scotland.

However, pro-independence supporters have condemned the "scaremongering".

In an interview with BBC economics editor Robert Peston, Mr King, who was one of UK's most successful retailers, said supermarkets currently spread the cost of doing business across the UK.

"But it is more expensive to do business in Scotland today. Business rates are higher, distribution costs are higher.

"If Scotland was to be an independent country, with businesses run separately in Scotland - as inevitably will be the case - prices would be higher," said Mr King, who resigned from Sainsbury's in July after 10 years.

He also warned about future investment in Scotland. Mr King claimed that supermarkets had already curtailed some investment because of the uncertainty about the referendum.

He said: "When you invest in a shop you've got to take a 25-year view. That's been almost impossible for the last couple of years - and probably for the next couple of years too, until we are clear what the tax-and-spend regime is going to look like.

"I don't think we are going to see a supermarket - and retailers more generally - rushing to invest until they can have really good long-term line of sight."

Buy British

Mr King added that Scottish food producers could find themselves sidelined by those consumers who like to buy British.

Products with a Scottish heritage, such as whisky, would not be affected, he said. But such items as beef or salmon might be.

"In many supermarkets, customers today express a preference for their beef to come from the UK, and if Scotland's not part of the UK, I could see that having an impact on their sales of products like that," he said.

And British salmon, which mostly comes from Scotland, might also fall out of favour as consumers turn to other sources. "Scottish salmon producers will find themselves competing with Norway salmon producers," he predicted.

A number of businesses have gone public this week about the possible impact of a "Yes" vote. Royal Bank of Scotland, Standard Life, and Lloyds Banking Group have said they would have to move functions to London for tax and regulatory purposes.

'Scaremongering'

And on Wednesday, the retailers John Lewis Partnership and Asda warned of price rises in an independent Scotland.

John Lewis chairman Sir Charlie Mayfield said there were "economic consequences to a 'Yes' vote".

He said: "It does cost more money to trade in parts of Scotland, and therefore those higher costs in the event of a 'Yes' vote are more likely to be passed on."

And Andy Clarke, president and chief executive of Asda, said: "If we were no longer to operate in one state with one market and - broadly - one set of rules, our business model would inevitably become more complex. We would have to reflect our cost to operate here."

In response to Sir Charlie's comments, the Scottish finance secretary John Swinney said: "Charlie Mayfield is entitled to his opinion.

"I think the argument is one that is firmly contested by other retailers who do not take the view that has been expressed this morning by Charlie Mayfield."

Earlier, former RBS chairman and chief executive Sir George Mathewson dismissed the warnings as "UK Government-driven scaremongering and political gamesmanship", and urged Scotland to vote "Yes".

And Martin Gilbert, chief executive of Aberdeen Asset Management, said Scotland could prosper regardless of the outcome of the referendum next week.

More on this story