Tuesday, 8 July 2014

Scots and The City

Last week I was fortunate enough to be invited to an event at Allen & Overy’s London offices. The idea was to get first-year Law students and second-year students from other disciplines thinking about our Vacation Scheme applications for next year, and how they might lead to Training Contracts. We heard from students who had secured training contracts, and had the opportunity to network with Lawyers and Partners from firms such as Allen & Overy, Shearman & Sterling, Hogan Lovells and more.

During the evening there was a panel discussion about the effect that Scottish Independence could have on the City. I jotted down of the points raised during the discussion, and thought I'd share them here

Some background:
The English and Scottish Parliaments were joined in 1707 by the Act of Union.
A referendum on Scottish devolution was held in 1997 under the new Labour Government. 74% of voters voted for a Scottish Parliament, and 63% voted for the Scottish Parliament to have tax-varying powers. A devolution settlement was reached, and the Scotland Act 1998 was passed. On September 18th 2014 a referendum will be held, with the yes/no question “Should Scotland be an independent country?” If the result is a yes-vote, Scotland will become independent in March 2016. 

What impact would Scottish Independence have on the City?
  • The City relies on the interconnection for ‘friends’ and thus influence. Scottish Independence will reduce the influence of rump UK (the rest of the UK). Extended devolution may be more preferable
  • Scottish Independence does not matter long-term; Scotland will just be another country for the City to deal with
  • The transition is unlikely to be smooth. Politics following a yes-vote will be dominated by who gets what
  •  Scotland needs the EU, and may have to adopt the euro, but it is possible that Scotland will be rejected by the EU. This would result in tariffs when trading with rump UK
  • It would be unsustainable for Scotland to keep the pound. Scottish oil and gas would be prone to price movements.  Companies may move across the border, even if only short-term.
  • The 2015 general election may result in a change of government, which could alter the details of independence negotiations
  • If Scotland keeps the pound, the impact on the city will be minimal, but then what would be the point in independence?
  • Lower business taxes in Scotland may incentivise businesses in rump UK to move to Scotland, but Scotland may also have more aggressive tax-raising powers potentially leading to lots of mergers and demergers
Most of the panel were in favour of a no-vote, though there are many arguments for Scottish independence too. Much of the talk revolved around the uncertainty of Scotland’s future if it did become independent, and the technicalities of the transition. Brandon Malone, Chairman of the Scottish Arbitration Centre (and supporter of the ‘yes’ campaign) details the opportunities this would create for the legal profession.

Read more
The In-House Lawyer – ‘Scottish independence: an update
The Firm – ‘Impact of Going Solo

Feel free to share any thoughts, comments, questions and opinions below


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