As legendary investor Warren Buffett remarked: “In the business world, the rearview mirror is always clearer than the windshield.”  You do not need to be the Sage of Omaha to know that the view from the driving seat right now is far from clear, whether you are a family business or PLC.

Although the May 5 elections are out of the way in the UK, uncertainty over a potential second independence referendum for Scotland remains, presenting the distinct possibility that the issue will continue to be a political football for the next four to five years.

Regardless of your politics, lack of clarity and the prospect of ‘neverendum’ will make businesses more reluctant to commit to long-term investment. This is a situation we can ill afford given the troubling size of Scotland’s deficit; a major reduction in jobs and activity in the North Sea; higher unemployment than the rest of the UK; and stalling economic growth.

Grey areas in a colourful debate

Also, as the June 23 Brexit vote rapidly approaches, data are being freely bandied by both the ‘Leave’ and ‘Stay’ camps to bolster their arguments. The truth is no-one really knows whether we would be better off ‘in’ or ‘out.’ The arguments are colourful but many grey areas remain.

In the event of a vote to leave the EU, the only certainty is several more years of uncertainty while an exit deal is worked out: the impact would be enormous. A  ‘yes’ vote for Brexit is also likely to result in the SNP calling for another independence referendum with the aim of Scotland joining the EU in its own right. Again, this would lead to even more uncertainty as re-entry terms are negotiated – with no certainty that Scotland would be welcomed back.

Cool heads and lateral thinking

There are some 4,000 foreign firms located in Scotland and supporting employment. However potential new inward investors are unlikely to see Scotland as a great place to set up European headquarters or significant volume operations until the political fog clears.

According to SCDI (the Scottish Council for Development and Industry) nearly half of Scoltand’s exports and 336,000 jobs in Scotland depend on trade with EU countries. Scottish companies whose customers are largely UK-based, may believe they have little to lose directly from the UK leaving the European Union. However, assessing political and economic risk requires lateral thinking not just about your own customers but also about your customers’ customers – cool heads are needed to consider potential wider ramifications.

Trump cards & Chinese chequers

Whether you are rooting for Trump or Clinton, uncertainty over the outcome of the US Presidential election on November 8 combined with evidence of the Chinese economic juggernaut losing momentum, add to the difficult task of steering a steady course in the months ahead.

Entering a state of paralysis is not an option, nor desirable for most businesses – but it is important for businesses to factor political and economic risk into major decisions, to rigorously test growth assumptions and to hedge risk where possible – be it exposure to currency fluctuations or interest rates.  As with all journeys, planning and preparation can help avoid mishaps.