We are on the cusp of discount rate announcements both north and south of the border. As we wait for those announcements, it's useful to take a moment to consider how we arrived here.
Until recently you would be forgiven for not realising that there was such a thing as a "Scottish Discount Rate" and that's because between 2001 and 2019 the discount rate in Scotland was the same as it was in England and Wales. Between 2001 and 2017 the rate itself also remained the same at 2.5%, notwithstanding various political and financial events over the period. In March 2017 the rate was reduced to -0.75% in England, Wales and Scotland (the rate in Northern Ireland remained at 2.5%).
Prior to 2017 there had been various reviews in relation to the method for fixing the discount rate but no legislative changes. In 2018 however, following the 2017 rate change, there was a consultation which ultimately led to the Civil Liability Act 2018 providing a new mechanism for setting the rate in England and Wales. A separate consultation process in Scotland led to the Damages (Investment Returns and Periodical Payments) (Scotland) Act 2019 which set out a new (and different) mechanism for fixing the rate in Scotland.
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