Monday - May 29, 2017

Scottish independence vote now being rated as “too close to call” UK’s financial and stock markets in a state of disarray


With the Scottish independence vote now being rated as “too close to call” UK’s financial and stock markets in a state of disarray

With the vote on Scottish independence, regarded as being possibly the most important in UK political history, just a few days away, most polls are showing that the campaign for independence have made major headway in recent weeks in convincing the hearts and minds of the Scots that independence will be good for the people.

Some opinion polls are even showing the “Yes” camp to be narrowly ahead by a margin of 51 per cent to 49 per cent – the first time any survey has shown this, since the debate began.

This kind of swing is reportedly creating waves in the UK financial establishment, with a number of the country’s leading financial service providers, among them Lloyds Banking Group and Standard Life, have already hastened to reassure their shareholders that contingency plans are well in place, including the possibility of relocation, if Scotland does indeed vote for independence.

In the shade of such uncertainty, the British pound suffered its largest one-day fall for more than a year, trading at $1.6147 against the dollar and €1.2473 against the euro, a drop of 1% in a single day in both currencies. According to reports members of the public and even some businesses have already begun transferring their capital to banks in England.

UK Banks are reported to be monitoring fluctuations in their deposit base in Scotland on a day-to-day basis, whilst coping with a constant flow of inquiries from their depositors regarding future implications if independence is granted.

The last-minute closeness of the contest has caused considerable discomfort among those opposing independence, with one of the most recent polls showing the two camps racing neck and neck to the finish line, with a major swing in support for those in favor. As often happens, it looks like the “don’t knows” will be the ones who will decide the final outcome of the vote, with 16% of potential Scottish voters falling into that category.

On the international market, institutional investors are reported to be becoming increasingly concerned about the possible knock-on effect, especially in Spain, where the government in Madrid is also having to contend with an often violent separatist movement of its own, in the region of Catalonia.

Should the yes vote win through, according to financial analysts, it would certainly take several months and possibly even years to negotiate the terms to make Scotland’s independence a financially feasible proposition, during which time the Bank of England would be required to remain in their role as the principal financial overseer for the major Scottish banks.

Photo credit: Lee Kindness – http://www.pbase.com/wangi/parliament

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