On the plus side for savers, a weaker Scottish currency would be likely to need the support of higher interest rates which could potentially increase returns. A further negative however would be the currency risk as the Scottish pound potentially devalued against Sterling, pushing up the price of imports from the Scots largest trading partner to the south.
Standard Life has gone on record saying that a Yes vote would be likely to see them follow the banks and relocate to London. Many top insurance companies are based in Scotland but have the bulk of their clients in England and there would be a question mark over whether UK consumers would be happy dealing with what would be in effect a “foreign” insurance company?
Another issue that I am already discussing with mortgage Lenders is around a client taking out a mortgage in sterling to buy in Scotland today but post-independence finding themselves earning a salary in weakened Scottish pounds against what could have become a foreign currency loan.
UK sterling could appreciate against the Scottish currency and borrowers could potentially end up owning more money in Scottish pounds than they had originally borrowed. We have yet to have this clarified with any of the lenders as to whether the post-independence loan will be in either sterling or Scottish pounds.
In terms of investments, if someone north of the border wanted to patriotically invest in the post-independence equivalent of the FTSE 100 of top Scottish companies they could find themselves potentially overweight financials by virtue of the large proportion of the Scottish economy that is financial services related, obviously assuming that the bulk of these firms hadn’t relocated to London.
An Edinburgh government could choose to follow the example of Dublin and create a tax advantaged environment for Scottish domiciled investments held by UK investors but with the need to invest, massive welfare commitments and limited fiscal resources it seems unlikely that Alex Salmond would give up the lucrative tax revenues to enable this.
Scots could also find that insurance premiums go up because of the well documented poorer health and shorter life expectancy north of the border. Even though some products price by postcode there are many whereby UK wide mortality and health figures mask the Scots relatively poor performance in terms of health so when insurers price for risk in a separate market post-independence, certain products could become far more expensive.
In terms of Europe, in return for membership of the EU, Scots could immediately give up much of their hard won independence by signing up to the Euro and the full force of financial regulation from Brussels. Savers could face an unfamiliar landscape of European style mortgage and investment products.
Tony Harris is CEO and founder of ContractorFinancials
Do you agree with Tony? Keen to hear pro-Scottish independence side too so please email Victoria.Hartley@ae3media.co.uk or use the comment boxes below
