D-Day for Scotland is one month away and that could mean increased volatility for the pound.
While the majority of polls still point to a “no” vote on independence a couple of smaller polls over the last few days showed a small swing to the “yes” brigade.
The FTSE had a story out yesterday covering the polls and it looks like a typical play on numbers to paint a particular picture. The gist is that the no votes had fallen by 2 points to 55% while the yes’s gained by two to 45% in one poll. The swing came with undecideds making a decision one way or another. They fell from 14% to 7%
There’s a multitude of different views on both sides of the fence for what a yes vote means for both countries. The balance of dangers mainly falls towards the Scottish side but there are large portions of risks that the UK needs to be aware of.
For Scotland there’s worries about going it alone and what currency they use. The UK has shut the door on a sterling currency zone while the EU door looks shut too. The Scots face losing business from some of the UK’s biggest pension providers and their own banks, who would seek the security of UK laws and regulations, as Scotland would have to set up their own.
For the UK the question is the loss of revenues, particularly from North Sea oil, and who would take over the oil fields. It’s unlikely Scotland will want to give them up and that’s a risk to the UK coffers. There’s also the debt issues with Scotlands proportion and how they will services it. Loss to GDP, loss to trade, all the problematic issues are lining up for both sides.
Overall, at this early stage, the risks to the pound are probably limited as even if we get a yes vote the details and actual move towards independence will take some time. Also flows into England will still be in pounds so more of just parking the money in a different place.
It’s going to be interesting as we lead up to the vote and we’ll need to watch whether those offshore see the outcome as positive or negative for the UK. As far as the rivalry goes between England and the sweaties, independence will not make their football team any better so there’s no worries there (not that we’re much better), and personally I wouldn’t want to see the Scots go out on their own. Different country or not they’ve been part of this little island for centuries and I think the UK will be poorer on the whole if they leave.
They’ll do what they want though and good luck to them and if we are going to watch any gauge of what the outcome is likely to be then the bookies is the best place to watch.
Scottish independence betting 18 08 2014
In the meantime be prepared to be bombarded daily by news and comments from those involved as they try to sway the voters towards each sides agendas. Even as I type Alex Salmond is on the wires saying that Scotland will keep the pound in independence as it is their currency and that Westminster can’t stop them. This is the sort of guff we’ll be hearing plenty of.
It just doesn’t look right