Scotland Has Decided.



Posted on: 22nd September 2014

Scotland has decided. And for many in the financial sector it’s probably time to take a sigh of relief.

The Republic of Ireland shook off rule from Westminster in 1922 after centuries and never looked back.

But the finances of England, Wales and Scotland are so entwined, independence could have been financially messy.

And here’s a few things that highlight why:

National Savings: How many English would have enjoyed having their National Savings being processed in a foreign country?

Jobs: Scottish giant RBS, Lloyds Banking Group, Clydesdale Bank. Standard Life and Aegon said they would set up English life companies and move assets, with a full headquarters move also on the table.

Tax: Currently all tax information is run by HMRC staff in Scotland. Surely this would have led to loss of jobs and assets?

Pensions: While the state pension would have been paid on time and in full, but things would get complicated if you are aged 30-50 and worked between England and Scotland. And who would pay your pension then? Meanwhile, company pension schemes would have also been affected because Scotland would not have to follow any new rules re the new pensions annuities freedoms. There’s also the question of responsibility for picking up the bill should a company go bust. Some have their headquarters in London and operations in Scotland, so does the buck lie with English or Scottish taxpayers.

Mortgages: When it comes to loans many questions would arise if Scotland had had to embrace a new currency?

Distribution of wealth: The pro-independence Scottish government said Scotland would be entitled to 90 percent of Britain’s oil wealth – based on divvying up the two countries’ waters – but only liable for about 8 percent of its 1.3 trillion pound ($2.1 trillion) national debt, based on its share of the U.K. population. The British government disputed this, pointing out that Scotland has higher per capita public-sector spending than England and so is more indebted.

Debt: How much of the UK’s national debt would Scotland have taken on? The debt-to-GDP ratio of an independent Scotland could have proved risky large as to sink it financially before it was even born.

So while some will be devastated by the No vote, others will be taking a financial sigh of relief.