On Thursday, 18th September 2014, people living in Scotland aged 16 and over can vote for Scotland to become an independent country or to remain a part of the UK.
This historic occasion is the subject of fierce debate, raising many questions about the potential impact on the financial lives of people living in Scotland and the rest of the UK.
We will know the outcome of the referendum on Friday, 19th September.
If the country votes to separate from the rest of the UK, the Scottish and UK Governments will begin negotiating the terms of separation. The Scottish Government has projected that these negotiations should conclude by 24th March 2016 and that Scotland would become an independent country on that date. Topics such as currency, Scotland’s share of the UK’s assets and liabilities, the governance of financial institutions and how Scottish firms will interact with the rest of the UK are currently unclear and would be clarified during the negotiation period.
If Scotland votes to remain part of the UK, Westminster has committed to devolving more powers to the Scottish Parliament, giving it greater autonomy over taxation, spending and welfare.
In the short-term, we expect Sterling to weaken and the share prices of companies listed on UK stock markets to be more volatile due to current levels of uncertainty.
What to do
Until we have more clarity, we believe that it would be premature to adjust financial plans.
In relation to savings, it is important to note that the Financial Services Compensation Scheme (FSCS) protects up to £85,000 of deposits, per individual, per institution. In the event of a yes vote, FSCS would continue to apply to Scottish banks until the day Scotland becomes independent (24 March 2016).
In relation to investments and pensions, our clients' portfolios are allocated geographically to reduce the impact of any one country underperforming. The majority of blue chip companies listed on the FTSE 100 operate internationally so we do not believe that the outcome of the referendum will have a significant long-term effect on these.
Mearns and Company
As you might expect, we have a neutral view on the referendum. Our role is to help clients meet their objectives irrespective of the political environment that we live in. We remain committed to our Scottish base and look forward to continuing to work with clients here and around the world beyond 18th September 2014.
Registered in Scotland, Company Number: SC288945
Mearns & Company are authorised and regulated by the Financial Conduct Authority
Registered office address: Anchor House, 112 Commercial Street, Edinburgh, EH6 6NF