Certainty is death and taxes

Certainty is death and taxes

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Another week on the Scottish independence debate, another series of comments from business and others on what next for Scotland and the UK… Much of those comments focused upon the conundrum that is ‘uncertainty’.

It’s worth reminding ourselves then what Benjamin Franklin wrote as the American Constitution was passed into law;

Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.

Key moments of the week included Royal Dutch Shell’s CEO, Ben van Beurden who expressed a preference for Scotland to stay in the UK, also noting that their investment would go on either way…

Read his full speech at: http://news.stv.tv/north/266242-read-shell-ceo-ben-van-beurdens-comments-on-independence-in-full/

Dundee headquartered Alliance Trust also noted contingency planning for any eventuality; here’s what CEO, Katherine Garrett-Cox (who incidentally sits on Prime Minister, David Cameron’s business advisory panel) had to say in their annual report;

We have always been and continue to remain focused on the service we provide to all our shareholders and customers across the UK and beyond. 2014 is an important year for Scotland. The referendum in September is creating uncertainty for our customers and our business, which we have a responsibility to address. Regardless of the outcome it is critical that we are able to provide continuity of service and protection for their investments and savings. To give them full confidence, we have started work to establish additional companies registered in England, in order to provide operational flexibility and to complement our existing business in Scotland.

We know that we cannot afford to stand still, as change, be it regulatory, political or business-related, is a critical part of the world in which we operate. However, we have the people, the systems and a clear strategy in place to be able to recognise and exploit the investment opportunities that may arise, which will allow us to continue to build a dynamic and successful business for our shareholders.

As the Yes Campaign trumpet these various interventions its worth noting that it’s Annual Report season and every Plc has to report on risk factors; patently Independence carries risk but if you trawl the Reports its by no means the only risk highlighted – the EU vote on withdrawal being a strong contender of equal import to business…

Meanwhile Citi Group published a report intimating, based on an analysis of all polls to date, that a Yes vote was ‘highly unlikely’ also noting however that there was nothing ‘inherently implausible’ about an independent Scotland.

They then cited three risk factors associated with independence – forecast reduction in oil revenues; a vulnerable banking system and monetary policy framework and currency…

Take a look at the analysis of their report at the International Business Times http://www.ibtimes.co.uk/scottish-independence-highly-unlikely-says-citi-1439306

You would then summarise the week as one with ‘uncertainty’ as the theme. To be balanced then we’ve not heard a great deal on the risk and uncertainty of staying attached to the UK…

Hence in the interests of balance here is a fact based on the current manner by which Scotland receives its funding from the UK Government via the Barnett Formula, it states;

Its principle is that any increase or reduction in expenditure in England will automatically lead to a proportionate increase or reduction in resources for the devolved governments in Wales, Scotland and Northern Ireland.

Hence if Mr. Osborne decides to slash the English education budget or indeed change the Barnett Formula one might take that as a bit of a risk…

One final note; this week we commissioned a leading economist to take a look at Scotland’s currency options and their impact on the UK and Scottish economies; we hope to report those findings in a couple of weeks time.

Thanks for reading and for your comments as ever we hope to help in offering a balanced view of the debate free from the dominant negativity of current political debate. Let us know if we are not doing our job!

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