BREXIT and the Scottish Financial Services Sector

This paper explores the potential impact of BREXIT on the Scottish financial services sector. For the purpose of this discussion the assumption is that Scotland remains part of the UK. At present there is clarity neither as to what BREXIT will mean for the UK nor how this will play out for the UK financial sector. There is also a good deal of uncertainty regarding Scotland’s future constitutional arrangements with regard to relationships both with the UK and with the EU. Given the extent of these uncertainties, we decided to omit reference to the possibility of a second independence referendum and what that might mean for the sector. That could be another topic for another day.

The paper is structured as follows. First we summarise the key issues related to the financial sector for the UK as a whole. Next we turn to the Scottish sector, first providing an overview of the sector and then considering the critical issues so far as each major component of the Scottish sector is concerned. Finally we summarise our conclusions. We note possible ’glimmers of hope’ for the sector, related to: 1. A possible ‘soft’ BREXIT 2. A special deal for UK financial services on skilled non-UK labour or, failing that 3. An analogous special deal for Scotland