By the time the next issue of Property Week appears the question of Scottish independence will have been answered.
The decision can’t come soon enough for some companies. The uncertainty spread like wildfire through the markets earlier this week as billions of pounds were wiped off the value of some of Scotland’s largest businesses as well as those with strong Scottish interests. The Royal Bank of Scotland, Standard Life and Lloyds Banking Group were all adversely affected by market unease after one poll at the weekend showed the ‘yes’ vote narrowly ahead for the first time. Sterling was also impacted, falling to its lowest level for almost a year.
As we report this week, a number of deals have been put on hold amid the growing lack of clarity over the outcome. And in the final countdown to the referendum next Thursday, it appears the property industry is as divided as the Scottish populace, with just as many donating to the ‘yes’ as the ‘no’ campaign.
I, however, am not in two minds. I would not normally nail Property Week’s colours to the mast in this way, but on this occasion I’m going to make an exception… so in the words of KC and the Sunshine Band, my message to the Scots is: “please don’t go.”
I do not see the major property upsides of independence, either for the rest of the UK or Scotland. Granted, you would see plenty of professional services companies move in because of all the office lettings to be done and there would be plenty of work for the agents. But Standard Life’s warning this week that it would move south of the border in the event of a ‘yes’ vote is ominous. If a major Scottish company is threatening to exit, it could be the thin end of a very substantial wedge.
There will also be the immediate fallout to contend with. Scottish-based corporates are likely to take a battering in the days following the decision as the market jitters really kick in.
The bigger question mark for property remains the issue of a currency union. If Osborne and Co were bluffing about refusing to allow Scotland to retain the pound, then it is academic, but if they were not (and the Governor of the Bank of England stated he didn’t think it was a workable scenario), the repercussions could be disastrous – especially when the recovery is still fragile. Not even Alex Salmond is confident Scotland would survive without the pound. Otherwise his preferred option would not be currency union.
Of course, the outcome may not be as uncertain as it appears. We could just be reprising the infamous 1992 General Election, when the exit polls were wrong and the Conservatives won - Scottish patriotism and a sense of wanting to be seen to back independence inflating the ‘yes’ vote (as well as all the women who, fed up with the negative tone of the ‘no’ campaigning, have switched allegiance).
There is another potential upside. Plenty of English regions will have noted how effectively the ‘yes’ campaigners have galvanised Scotland (well half of it anyway) to action and will be wistfully recalling the days of the RDAs (remember them?), which actually represented them in a meaningful way.
It would be good to see the regions demand more autonomy in light of the referendum - as it would to see the Scots vote ‘no’. Honestly, you won’t regret it.