The UK’s financial services industry has had more than its fair share of upheaval in recent years. The greatest turmoil seems to have stemmed from events in the month of September, most notably the collapses of Northern Rock in 2007 and of Lehman Brothers the following year.
On Thursday 18 September next year the people of Scotland may usher in another period of tumult and uncertainty when they go to the polls in the country’s independence referendum.
But what are the implications for financial services across the UK? One senior insurance figure in Scotland suggests a ‘yes’ vote would see flows of business on both sides of the border seize up in the “headlights of uncertainty”, and that, in the wake of a ‘yes’ vote, the resulting confusion in the UK financial services “would make the Lehman crisis look like a short term blip”.
Yet outside Scotland there remains a sense of complacency regarding the referendum, reflecting the expectation of a vote against. That extends to financial services, with many companies outside Scotland yet to grasp what a ‘yes’ vote would mean for the industry. Opinion polls have consistently shown that the majority of Scots want to remain part of the UK, but the yes campaign and the effect of an unpopular Westminster administration cannot be underestimated.
First Minister Alex Salmond, who has dismissed the campaign so far as a “phoney war”, likes to refer back to the Scottish parliament elections in 2011, when he won convincingly despite being well behind in the polls at the outset.
Much of the debate has so far been speculative and will continue in that vein until after the vote.
Only then, if Scots opt to separate, can negotiations begin between the UK and EU authorities and the newly independent Scotland. Under the transition plan that would ideally take no longer than 18 months, given that independence day has been pencilled in for March 2016, with elections to the independent parliament following two months later.
The Scottish government is to add some detail to its proposals in a white paper expected to be published in November, but we will still be left with a long list of known unknowns.
And those unknowns are numerous, covering currency, credit rating, EU membership, tax, regulation, the transition timetable, deposit protection, compensation and a lot more besides.
But before we delve deeper into what it all means, let’s clarify exactly what we mean by independence.
