Ghillies on the Tweed

Is Scotland headed towards independence?

That’s the question Scottish voters will decide next week. If they vote to secede from the United Kingdom, Queen Elizabeth will remain Scotland’s nominal head-of-state, but pretty much everything else is unclear. Like Quebec’s vote on independence 20 years ago, Scottish independence is an emotional question, as well as an economic and political one. Then as now, a long-standing separatist movement appeared to gain significant momentum shortly before the referendum.

Yes/no opinion on whether Scotland should be an independent country:


The UK economy is deeply integrated. Sorting out which country would benefit from North Sea oil—and who would be responsible for the £1.4 trillion in UK debt—is complicated. Oil and gas account for 1.8% of the UK economy, but they would comprise 13% of Scotland’s. An economy that depends on natural resources is more volatile, and subject to the resource curse and the Dutch disease.

But intricate economic and financial arguments won’t rule the day next Thursday. Many Scots are still smarting from Margaret Thatcher’s economic reforms in the ‘80s. For them independence is a left-right issue. It’s somehow fitting that the independence of Adam Smith’s homeland is turning on issues of national wealth and state capitalism.

Bookmakers currently make odds of a “yes” vote on the referendum at less than 50/50. Despite recent polls, there’s a natural conservatism many people have when they consider changing the status quo. Like salmon swimming the River Tweed from England into Scotland, political independence is an upstream swim.

Douglas R. Tengdin, CFA
Chief Investment Officer
Phone: 603-224-1350
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