Last year’s Scottish independence referendum was a watershed moment for many in the investment arena causing conflict, confusion and infighting up and down the country. Historically investors and investment markets as a whole have tended to discount what are seen as local issues although the Scottish independence referendum certainly made many people think again. As a consequence, despite the fact that many Scottish estate agents had forecast a significant bounce after the No Vote there is still confusion and concern about the medium-term outlook.
Surely the independence movement is dead?
Despite the fact that all parties involved in the referendum agreed that this was a “once-in-a-lifetime” vote it would appear that many have reneged on his promise. Support for the traditional Labour Party has plummeted across Scotland and the SNP is forecast to take in excess of 90% of the seats on offer in the UK election. This is causing something of a constitutional crisis because the SNP is now looking to place itself as “king maker” with a Labour coalition government.
So what does this mean?
The SNP has been very vocal in its demands from a Labour Party expected to be shy of a majority in the House of Commons after the next general election. Polls so far suggest that it is neck and neck between Labour and the Conservatives although there seems to be growing momentum in favour of the Tory party. However, we may well have a situation where not only the largest party is not in power after the next general election but the SNP, intent on breaking up the UK union, could trade yet another independent vote for its support of the Labour Party.
Are investors really concerned?
Over the last few weeks we have seen a number of prominent fund managers suggesting that there is still a risk factor associated with not only Scotland but the rest of the UK in the event of yet another independence referendum. The SNP seems determined to push through independence, even if it is by the back door, and this is causing concern amongst many investors. There is also the issue of balance of payments for the rump of the UK in the event of independence and the oilfields as well as Scotland’s share of the UK national debt. Is this déjà vu?
When will this all end?
The Edinburgh property market is one of Scotland’s more active real estate sectors and while there has been some demand for properties in the region of £400,000-£1 million there is limited demand in general. As we approach the UK general election there is every chance that the risk factor associated with investment in Scottish property will edge higher. The Labour Party has been very quiet of late regarding a potential coalition with the SNP although whatever the party decides this is likely to be mired in controversy and could have long-term ramifications for Labour.
Despite the fact that last year’s Scottish independence vote was seen as a “once-in-a-lifetime” situation it seems that we could have a replay sooner than many had expected. When you bear in mind that the last referendum had a two-year run-up to the actual vote, during which time confusion, concern and an increasing risk factor took centre stage, we could be on the verge of a replay.
Do the politicians not realise that this concern and uncertainty is not only impacting the Scottish economy and the Scottish property market but also the UK as a whole. When will we finally be able to draw a line under the subject of Scottish independence and what many are now calling the “neverendum”.