A rash of news stories in recent weeks suggest panicked investors are pulling their money out of Scotland.

Uncertainty over tomorrow’s independence referendum has wiped billions off the value of Scottish businesses, we have been told.

Other reports have suggested that potential buyers are dithering over house purchases, and that investors and pension savers have been shifting assets out of Scotland.

Has there been significant “capital flight” from Scotland – or is this another example of what First Minister Alex Salmond has called “increasingly desperate and absurd scare stories”?

The analysis

On 8 September a YouGov poll put the yes camp in the lead for the first time. Several newspapers reported that billions were wiped off the value of Scottish businesses as a result.

But share prices go up and down all the time. They can plummet one day and bounce back the next. Is there a long-term trend of investors selling their assets in Scotland’s biggest businesses?

In a word : no, according to two experts who have tracked the performance of Scottish firms since the 1950s.

Professor Paul Marsh from London Business School and Scott Evans from Walbrook Economics have produced what they call the Scotsie 100 – an index of the 100 companies traded in London but headquartered  in Scotland.

The five biggest are: Scottish and Southern Energy, Standard Life, Royal Bank of Scotland, Aberdeen Asset Management and Weir Group.

What has happened to the value of the Scotsie 100 companies compared to stocks in the rest of the UK in September?


From 29 August to 15 September Scottish stocks fell by just 0.4 per cent — well within the normal range of fluctuation, and in fact “exactly in line with the rest of the UK”.

It is possible to see the effect of independence-related events in that graph. Scottish stocks fell immediately after 8 September, presumably as a reaction to the YouGov poll. But they recovered within two days.

Events that have nothing to do with the referendum will also have influenced share prices. Mr Evans thinks the rise on 4 September was prompted by an 8 per cent boost to Standard Life’s share price when it announced the sale of a Canadian subsidiary and a special dividend.

It’s true that Scottish companies have underperformed since the YouGov poll put yes in front, but only very slightly: the Scotsie 100 fell by 1.4 per cent compared to 0.9 per cent for the rest of the UK after 8 September.

All of this suggests that billions have not been wiped from the value of Scottish businesses – or not for long.


Measuring capital flight is more complicated than just tracking share prices. We would want to know how bond, currency and property markets have reacted, and whether investors and savers have pulled their assets out of Scottish financial institutions.

But good statistics are more difficult to come by here. Many media stories about investors moving their capital out of Scotland are based on anonymous sources or hearsay, which makes them impossible to check.

Some asset managers have gone on record to say they have moved hundreds of millions of clients’ money.

There are also reports of the property market in parts of Scotland slowing up and even of buyers putting break clauses in contracts so they have the option to pull out if there is a yes vote.

But there is no way of knowing how widespread these trends are or putting a final figure on the net flow of capital in or out of Scotland.

Reports of savers moving their money out of Scottish banks are similarly short on hard data.

It’s true that there have been big fluctuations in the value of the pound against most currencies in recent weeks.

This is widely seen as a reaction to independence polls, although it is impossible to say how much other factors have added to the volatility.

The future

So evidence of widespread capital flight so far from Scotland is pretty weak. Would investors pull their money out after independence?

Nobody knows, although RBS and Standard Life say they have contingency plans to move their headquarters out of Scotland.

Will savers and investors panic?

Savers shouldn’t. The Financial Services Compensation Scheme will continue to guarantee deposits of up to £85,000 in bank accounts up to independence, when the Scottish government says it will set up a similar scheme, so panic withdrawals ought to be unlikely.

What about investors in Scottish companies?

Messrs Marsh and Evans say: “The fact that the terms of any separation from the UK have not been pre-negotiated is generating considerable uncertainty.”

But they also say this: “We believe that investors in Scotsie 100 stocks should not be unduly concerned, nor should they be making contingency plans to rebalance their portfolios.

“To some extent, they are protected by the fact that both companies and individuals can re-domicile if necessary. There would also be a period of at least eighteen months during which the terms of separation are negotiated. They can afford to wait and see.”