With the Scottish Independence referendum fast approaching, now is the time for voters to start seriously considering whether they fall on the 'Yes' or 'No' side of the campaign. The question, "Should Scotland be an independent country?", is a potentially historic one; a range of issues including finance, oil, defence, currency and taxes will all be significantly affected by its result.
As such, it's important that voters remain aware of the financial impact an independent Scotland will have on Great Britain, and what will happen to business and personal finances should Scotland stay or leave.
Currency
One of the biggest issues being debated as part of the referendum is currency. With the Scottish National Party (SNP) keen to keep the British pound as part of a currency union, the three main Westminster parties - the Conservatives, Labour and the Liberal Democrats - have unequivocally ruled out such a share.
It has been argued Scotland's assets like North Sea oil and gas will benefit the pound, while a monetary union will also leave room for differences in fiscal and economic policies akin to the union between Luxembourg and Belgium. In addition, splitting from the pound could have a 'damaging effect' for businesses in the rest of the UK.
However, the other side of the debate argues that Scotland would have to face constraints on economic policy in line with the rest of the country. Furthermore, the difficulty of not just entering but maintaining an agreement begs the question: why should the rest of the UK have to enter into a union with Scotland?
Conversely, Scotland could enter the EU and adopt the euro; a move which would require approval from existing member countries. While the SNP believes there would be no opposition from members, the President of the European Commission, Jose Manuel Barroso, believes it would be "extremely difficult, if not impossible" for an independent Scotland to gain entry to the EU.
Jim and Margaret Cuthbert, economists cited by the BBC, commented on the currency issue: "Scotland has to be very careful that, in negotiating its relations like the rest of the UK and the EU, it does not make concessions which will impose constraints which ultimately prove to be crippling.
"Any choice, for example about forming a sterling currency union with the rest of the UK would have to be viewed very carefully in this respect."
GDP
Scotland is one of the wealthiest countries in the world, according to Deputy Scottish First Minister Nicola Sturgeon - though that's simply down to GDP per head. If Scotland was to be classed as independent, it would rank as the 14th highest country in terms of GDP per head, putting it above the 18th-placed UK. In fact, the question being posed by the Yes campaign is: "What would you say to living in one of the world's wealthiest nations?"
However, these figures are based on statistics from the UK Office for National Statistics. This allows Scotland - with its current lack of independence meaning it doesn't have official GDP statistics of its own - to make an equivalent figure for GDP per capita. All this showcases Scotland's comparative wealth.
The figure is impressive at face value, but the referendum may actually dampen Scotland's wealth prospects, critics argue. The investment decisions of big companies may change, while the size of any country's GDP is also highly dependent on the currency.
Interest rates
If Scotland was to become independent, the expectation is that a new Scottish Government will issue gilts and that interest rates will rise to "reflect its challenges", writes Teresa Hunter for The Telegraph.
However, the Scottish Government website suggests differently, especially when it comes to mortgage rates. "In an independent Scotland mortgage rates will continue to be based on the interest rate set by the Bank of England," it says, "which in a Sterling Area will be exactly the same for Scotland as for the rest of the UK, just as it is now."
But the issue of interest rates and independence is not so clear cut. If independence is achieved, Scotland could well be given a lower score by ratings companies, making it more expensive for Scotland to borrow money. This extra expense could be passed on to customers via mortgage repayments. This scenario is not set in stone but indications from major ratings agencies like Moody's and Standard & Poor's (S&P) suggest a challenging future is ahead.
University fees
University fees in Scotland will also face changes should independence triumph in the referendum. Currently, university education is free for Scottish students and other EU students studying in the country, but UK students have to pay up to £9,000.
While the SNP plans to continue this process, lawyers may dampen any expectation of free university education for the future. Under EU regulations, such discrimination may not be allowed, offering UK students the opportunity to travel north to study. This could have a big impact; Scottish universities may have to start charging native students or offer their services for free EU-wide.
Scottish residents have a big decision to make come 18 September 2014; the outcome will have an impact on the financial landscape regardless of whether it swings to 'Yes' or 'No'. Commercial and personal finances will be affected and it is worth planning ahead to ensure all investments, assets, businesses and cash is as secure as possible in the long-term.
