Belfast Telegraph

Thursday 31 July 2014

Uncertainty spooking investors in Scotland

David Elliott, Business Editor
David Elliott, Business Editor

Good news it can enjoy, bad news it can generally cope with, but uncertainty is a whole other ball game.

You only have to look at the reaction of financial markets during periods of doubt.

As the credit crunch took hold in late 2007 and early 2008, the uncertainty surrounding the end of the boom times caused investors to panic, pull their money out of equities and pile into gold and other so-called safe investments.

It would be a bit rash to suggest there's panic around the Scottish Referendum, but there is certainly a lot of uncertainty, and that in itself is enough to make some of the region's inward investors analyse the "what if" scenario.

Oil giant BP is one of the biggest names in Scottish corporate life and is the latest to have fired a quite considerable shot across First Minister Alex Salmond's bows.

Boss Bob Dudley has planned investments of £10bn in the North Sea between now and 2016. He's now warning that could be in jeopardy if Scotland became independent, particularly on the issue of the type of currency the region would adopt after a Yes vote.

Meanwhile, fund managers in Scotland are warning they'll have to shoulder the burden of a new system of financial regulation under independence.

More and more Northern Ireland firms are beginning to analyse what an independent Scotland will mean for them.

The answers are too long to explain in the confines of this column and depend on a huge amount of variables. Much like BP, one of the biggest risks is around currency and tax.

If Scotland is forced to adopt a different currency, particularly the euro, then that would leave Northern Ireland stuck between two regions using the euro and therefore able to easier trade with the rest of Europe.

Alex Salmond has also pledged to reduce Scotland's corporation tax so again, we would be between regions with lower big business tax.

We'll have to wait to find out how Scotland votes, how it works out some of its economic conundrums under independence and how its trade with the rest of the world is affected.

Until then, nothing is certain.

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