In light of the confusing situation regarding the U.K.’s membership of the European Union, ahead of the forthcoming referendum, the SNP has today lit the blue touch paper for a second referendum on independence. A number of new policies have been discussed over the last few months many of which revolve around the Scottish property market and an ever increasing tax burden. Where does the new announcement leave the Scottish property market and the Scottish economy?
Lessons learnt from 2014 referendum
Ahead of the 2014 independence referendum, a period of campaigning which seemed to last forever, there were signs that investors were taking a step back from the Scottish property market. Indeed as we move towards the end of the first quarter of 2016 it is only now that we have seen any real recovery in the higher end of the Scottish property market – areas such as Edinburgh.
Recent figures released by the Scottish government show a £15 billion deficit for the Scottish budget during 2015. As we approach what would have been Independence Day for Scotland, had the referendum been a success for the Yes campaign, there is much political mudslinging. However, there is no doubt that Scotland could be a self-governing/independent nation, whether this is inside or outside of the UK union, but it is more the economic situation which is under the spotlight today.
A more fluid property market
The Scottish government has on numerous occasions talked about fairly drastic measures which would free up an array of land underused at this moment in time. Quite what impact this would have on investor sentiment, the threat of a forced sale or compulsory purchase, remains to be seen although such policies would go against the ideals of a free market. However, there is also no doubt that there is sufficient land to fuel a property boom in Scotland although persuading landowners to “better utilise” their assets is proving difficult.
The real danger is that forcing landowners to sell against their will may release much needed land but curtail future investment. Is this a risk worth taking?
Economic paralysis
The 2014 independence referendum was headline news for many months and a prolonged period of campaigning certainly hit the Scottish economy. It is debatable as to whether a second referendum would have such a prolonged impact on the Scottish economy with the likelihood that the timescale would be reduced. However, today’s announcement by the SNP has fired the starting gun for the second referendum but so far nobody has any idea when this may occur.
There will be much debate, there will be political wrangling and while investors would hope for a more positive campaign from both sides, it is difficult to see much change from the first referendum campaigns. Both parties have a very strong case for their particular point of view but the danger is a second referendum may expose the Scottish economy and the Scottish property market to a period of relative paralysis and uncertainty.