The referendum – a step into the unknown!

Whilst the future of the United Kingdom hangs in the balance, no one really seems to be 100% clear about the ramifications of Scottish Independence. There are simply stacks of financial questions that are yet to be answered with any alacrity and certainty.

Having watched Alex Salmond last night on the BBC, I’m not sure that we even know if Scotland will have it’s own currency or share the pound? Surely, voters should be absolutely 100% clear on this before voting? Alex Salmond feels that the pound will continue to be used in an independent Scotland. However, all main political parties in Westminster have said this wouldn’t be the case, and Scotland would have to introduce a different currency.

From a financial point of view, this has to be top of mind with investors. Any change to currency could be problematic and threaten economic stability.  Some leading economists have pointed to potentially negative consequences as a result of an independent Scotland, believing that the uncertainty surrounding currency and tax regime could stunt economic growth. In fact, Axa last week predicted a ‘yes’ vote would knock 0.75% off economic growth. A split away from the union, also raises issues over who owns North Sea Oil and gas – how much should Scotland own?

In addition,  yesterday, property website Zoopla warned that house prices could fall by more than £30,000 if Scotland breaks away from the UK.   It’s unclear what will happen to mortgages. If you own a ‘sterling’ home loan, will you be subject to fluctuating exchange rates if the currency changes? This would mean your mortgage would grow or shrink depending on exchange rates!

On such a momentous occasion, I can’t help feeling that the voters (over 4 million of them) are stepping into the unknown, having been left ill-informed by political parties.  Large companies such as Standard life have threatened to move to England if Scotland votes for independence. All of this will undoubtedly cause economic uncertainty both sides of the borders

Should investors consider taking out their investments and savings from Scotland?  The stock market typically doesn’t like all this uncertainty and we’ve already seen share prices in Scottish companies have fallen.  Do you wait or do you take this as an opportunity to purchase shares at a lower price?  Really, only you can decide that as with the Scottish financial policies being ‘up in the air’, we can’t claim to know what the impact is going to be and it therefore depends on your own attitude to risk.  One good thing for savers is that all savings are protected by the FSCS – Financial Services Compensation Scheme until 2016 – so at least there isn’t a mad rush. 


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