Scots are warned to beware ‘Montreal effect’ on companies

What would a No vote mean for Scottish companies? A new term is starting to pop up in conversations in the business community – “the Montreal effect”.

Canada’s largely francophone province of Quebec held an independence referendum in 1980 and another in 1995. The uncertainty around its “neverendum” had a chilling effect on Montreal’s status as a corporate hub, says Colin Mason, a professor at the University of Glasgow’s Adam Smith Business School.

He says 30 companies, including the Bank of Montreal, moved their headquarters from Montreal to Toronto between 1978 and 1981. The number of Canada’s top 500 companies by revenue with their head offices in Montreal fell from 96 to 75 between 1990 and 2011.

Could the same thing happen in Scotland? Quebec’s situation differs in many ways – not least because language has played a much bigger role there. But Brad MacKay, a professor at the University of Edinburgh Business School, says the risk of a “Montreal effect” cannot be ruled out.

“Businesses gravitate towards certainty,” he said. “I think if there was a No vote and the Scottish government said, ‘OK, we’re now just going to get on with it,’ then probably you would not get the ‘Montreal effect’.

“If, on the other hand, you got a fair amount of animosity and you had the nationalists say, ‘We’ll give it a decade and have another go,’ then I think . . . inevitably you would start to see some businesses move out.”

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