On Thursday 18 September 2014, after years of
political wrangling, Scotland held its hotly anticipated Independence
Referendum and voted against it with a 55% majority in favour of maintaining
the Union with the rest of the UK.
Of the many questions that the Independence Referendum threw into the mix, none were as fiercely debated as the subject of the economy. In the final days before the vote, many massive businesses began to suggest they would leave Scotland in the event of a Yes vote, with others predicting a price hike in their products.
The impact of the Referendum spread beyond just Scotland too, with the strength of the pound flailing in the days leading up to the vote, but making a swift recovery immediately after the No vote was revealed.
With Scotland having rejected Independence for now, what lies in store for the nation?
In the final week of campaigning, the main party leaders of Westminster put together a devolution promise to sway the vote to a No and maintain the Union. The offer, being referred to as “devo-max” will see Scotland having independent tax powers from the rest of the United Kingdom, and could potentially see the nation removing many controversial taxations put in place by Westminster, including the strongly protested “bedroom tax”.
These new powers would effectively see Scotland become all but independent from
So what does this mean for Scotland’s financial sector?
At least for the moment, the major companies stationed in Scotland that
threatened to leave in the event of a Yes vote have reaffirmed their commitment
to stay in Scotland. However, with the devolution plans still being debated,
there is a possibility that they may opt to leave if the financial environment
is not suitable for their interests. There are also concerns that Scotland will
not be an appealing location for international investment in the light of more
In addition, there are concerns that independent taxation powers in Scotland could lead to some very severe taxes, which could harm many of the Scots, leading to more people using payday loans and a surge in the number of direct payday lenders.
The details of the devo-max offer are still being negotiated, but the coming
years could be very interesting indeed for Scotland and the wider UK.
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