Independent Scotland would be a “big success”, says Martin Gilbert

The chief executive of Aberdeen Asset Management, Martin Gilbert, says an independent Scotland would be “a big success”.

However, Gilbert continued his policy of not revealing how he plans to vote in the referendum on September 18 when interviewed on BBC Radio 4 this morning (September 11), adding that Scotland would be prosperous in either outcome.

The interview came alongside news that the Royal Bank of Scotland plans to move its registered headquarters to London if the Scots vote for independence. The bank says the move would be a technical procedure which would not require moving jobs and operations to England.

As chief executive of Scotland’s largest asset manager – and potentially the largest listed manager in Europe – Gilbert’s opinions on Scottish independence have been closely watched, though he has been careful not to take sides.

Other Scottish companies have been less cautious. In February, Standard Life, which is based in Edinburgh, said it may move parts of its business to England if the Scots vote for independence. The insurance company owns Standard Life Investments, which has £179 billion (€225 billion) under management.

The pro-independence vote appears to have gained momentum, according to recent polls, and sterling has depreciated by about 1.1% against the US dollar and by 0.8% against the euro since the end of last week.

Azad Zangana, European economist at London-based Schroders, notes that a number of stocks with heavy exposure to Scotland have also seen notable falls in their share prices this week.

A Schroders study in July, called Scottish independence: economic and political challenges, predicted that the main UK political parties “are not bluffing” and will not agree to a currency union, and whether Scotland adopts its own currency, or attempts to use sterling without the permission of the rest of the UK, there is “a huge amount of uncertainty” for businesses based in Scotland.

Also, EU membership for an independent Scotland is a doubt, says Schroders, especially as countries with separatist movements would block Scotland’s accession in order to avoid creating precedence. This places many companies but especially banks in danger of losing access to the world’s biggest market, the report says.

Implications for the UK include the loss of North Sea oil and gas, leaving public finances worse off and impacting the trade and current account deficit. The UK’s current account deficit is currently around 4.5% of GDP, but this could rise to between 5.5-6.5% if Scotland leaves, Schroders says. This would push the current account deficit towards levels associated with a balance of payments crisis, which is very likely to trigger a sharp depreciation of the pound.

“Overall, both international and domestic investors are right to be concerned over the prospects for a ‘yes’ vote in seven days time, and we are not surprised to see heavy hitting Westminster politicians scrambling up to Scotland to make a last ditch effort,” says Zangana.

©2014 funds europe



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