Sterling slips over Scotland “Yes” vote fears

Scotland Yes vote

Shock results of this weekend’s Sunday Times/YouGov poll saw those in favour of an independent Scotland creep above pro-unionists for the first time, causing Britain’s currency unit to slip by nearly 1%.

Uncertainties over Britain’s future caused the pound to a 2014 low of $1.6203, whilst the share prices of major UK companies with links to Scotland are feared to follow suit.

Scottish National Party (SNP) leader Alex Salmond is riding on a wave of public opinion in his native Scotland following a triumph in the second pre-referendum debate and the party’s focus on anti-elitism and social justice has captured voters’ imaginations. Opponents, however, continue to highlight the economic and political uncertainties that would follow a break away from the union, with neither the independence nor the “better together” campaign having a clear idea of what would happen in the immediate aftermath of a yes vote.

[There will be] uncertainty over issues ranging from the timelines for political and economic independence, resultant institutional frameworks, lender of last resort for Scotland, the division of assets and liabilities, fiscal impact and policies, and what currency choices Scotland will have available and choose,” said leading UK bank Barclays in a research note.

BBC economics editor Robert Peston added that “the longer the uncertainties persist, the more prolonged the UK will suffer from an elevated cost of finance, and the greater the harm there will be to economic growth – both sides of the border.

The UK government has been criticised by those on both side of the debate for failing to engage with the concerns of Scottish voters and undermining the risk of a yes vote. The latest poll results appear to have provoked an 11th hour re-evaluation of that threat, with Chancellor George Osborne causing a stir today by suggesting a move towards “max devolution,” handing over extensive power should Scotland vote to remain part of Britain.

I thought it was definitely going to be a No vote until last Monday… but now I don’t know,” YouGov political expert Anthony Wells said this morning in an interview with City AM.

 

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