A London Scotsman’s view on independence

Yesterday’s white paper has moved the debate a few steps along the road, increasing public awareness about the vote in September 2014 to decide if Scotland should become independent from the United Kingdom.

The Scottish National Party (SNP) published its white paper yesterday, outlining its view on how this change to the United Kingdom's political and economic landscape could be implemented. This is the first time it has given us an official document to digest on why Scots should vote 'yes'.

Political parties united

It is rare to find all the major political powers in Westminster in agreement on a unified policy, but in this case they are united in the opinion that Scotland should vote 'no' and stay within the UK. Essentially, during the next ten months the SNP will be painting a picture of grass that is greener on the other side, while the massed ranks of the opposition attempt to demolish the credibility of the plan.

No doubt yesterday's white paper will create more questions than answers, and a number of thorny issues are likely to cause tension on both sides of the border. For example: should Scotland have sole rights to the North Sea oil fields? Should it keep sterling as its currency, and should the Bank of England really be the lender of last resort? Will Trident be removed from Scottish naval bases, and will the British army still have such a disproportionately large Scottish contingent?

What is the cost?

Personally, I feel everything will boil down to how much it will cost Scots to gain this independence. The most recent survey indicates that 5.3 million people live in Scotland, representing 8.3% of the total UK population. Figures from 2011-2012 show that public expenditure per person was £10,900 in the UK as a whole and £12,100 in Scotland. The fact that Scotland is less densely populated than the rest of the UK partially explains this discrepancy.

In short this means that, to maintain the standard of living the population is used to, the Scottish government will need to find an extra £100 per month or £1,200 per year per person. This could be done in two ways: by trimming spending or by raising taxes. Scots are not called 'canny' for nothing, and with the country's weekly earnings standing at £498, against the average of £506 in the rest of the UK, this prospect will sharply focus people's attention on exactly how much they are willing to pay for independence.

Our clients’ sentiment

Over the course of the last year IG has been running a binary on Scottish independence. At present, judging by the sentiment demonstrated in our clients' accounts, there is only a 16% chance that Scotland will vote 'yes'. It will be interesting to see what impact the release of the SNP's white paper has on our clients' thinking.

As a patriotic Scot who has been living in London for the last 15 years, I will not be eligible to vote. And for such an important decision as this I am a little disappointed. However, like almost all of my Scottish friends living down here, I hope that common sense rather than misplaced patriotism prevails, and I hope a resounding 'no' will be the outcome from the ballots next year.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.