If Scotland does lower its corporate tax rate, expect more investment ops jobs

To some giving Scotland more control over setting its corporate tax rate is a recipe for a budgetary black hole, to others a catalyst for inward investment. As far as financial services job creation goes, one sector is likely to primarily benefit from the move - investment operations.

Holyrood has just weighed in with an argument for why Scotland should be able to reduce its corporation tax rate to 12.5% in a 54-page report released today. It's a direct counter to the paper published by HM Revenue & Customs last month, which suggested Scotland could see a budget shortfall of anything between 500m-2.6bn a year if it cuts corporation tax.

Finance secretary John Swinney said that lower corporation tax is a "vital source of competitive advantage in an integrated global economy, helping to attract new businesses and highly-skilled jobs".

We've mentioned previously how a low corporation tax in Ireland was key to attracting international financial services firms, and developing its international financial district, which now employs nearly 33,000 people on the Emerald Isle.

However, if corporation tax is slashed north of the border, in terms of financial services job creation, it's likely that Scotland's gain will be England's loss.

Investment operations roles have been gravitating from London to both Glasgow and Edinburgh over the last few years, and a reduction in corporation tax is only likely to accelerate this trend, says Alan Thornburrow, chief executive of Scottish Investment Operations.

"A lower corporation tax will make us more competitive internationally, but if you look at the business we've been winning over the last few years, much of this has come from London and the South East," he says. "There's an argument for saying that the talent base and infrastructure we have in place makes Scotland an attractive destination, but cost is inevitably also a deciding factor."

It's not just London that Scotland is competing with for investment operations jobs, though. Thornburrow says that East Europe and Asian financial centres are also vying for business, and that a lower corporate tax rate (combined with a concentrated pool of talent) would only serve to make Scotland more alluring.