Word on the Web - Scottish independence

Industry commentators forecast what a 'Yes' vote in the Scottish independence referendum would mean for the UK’s financial markets

'Scottish independence would be devastating'A 'Yes' vote in the Scottish independence referendum on 18 September this year would “tank the markets, whack sterling, force up interest rates, and see the UK fall off the international top table”, blogs Benedict Brogan, Deputy Editor of The Telegraph

“It would be the international equivalent of a suicide bomb,” he writes. “The idea that the day after Scotland voting to secede, the rest of us would sail on is for the birds.” 

Brogan claims that the UK Government is not doing contingency work on Scottish independence and questions why. 

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Are markets underrating the risk of Scottish split? 
Brogan's concerns about the potential economic impact of Scottish independence are shared by Josie Cox, European Markets Reporter for The Wall Street Journal, who predicts that a 'Yes' vote could “deal a blow to markets on both sides of the border”. 

Cox asks several economic experts whether the markets are underrating the risk of a Scottish split and what independence might mean for the UK's financial markets. George Buckley, Chief UK Economist for Deutsche Bank, suspects that the period of uncertainty that would follow a 'Yes' vote “would be negative for both gilts and sterling”. 

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Scottish independence will trigger mass exodus of financial services 
If there is a 'Yes' vote, Scotland should brace itself for a mass exodus of the financial services, warns the Centre for Economics and Enterprise Investigation (CEBR). The think-tank has calculated that independence would lead to a third of jobs in the financial services sector – between 20,000 and 40,000 jobs – being moved south of the border. 

CEBR Executive Chairman Douglas McWilliams says: “The knowledge of the euro suggests that it is very unlikely that there will be a banking union if Scotland is independent.” 

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Scots are ‘happy to pay extra tax’ after Yes vote
Others say independence would boost Scotland’s economy. Among them is Dennis Canavan, Chairman of the Yes Scotland independence campaign, who claims the “pooling and sharing” of resources with Westminster has failed.

“It just hasn't worked, because we have now in the UK the fourth most unequal society in the developed world,” he says, “whereas in Scotland, with the advantages of an independent Scottish Parliament, we would have all the economic levers at our disposal to bring about a fairer distribution of wealth.”

This might include tax increases that, according to Canavan, Scottish people are ready to accept if it means a “fairer, more sharing society than what we have at the moment”.

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Employment in Scotland at record high

The Scottish National Party (SNP), meanwhile, reckons independence would help the country reduce jobless numbers further, after welcoming the news that employment in Scotland has reached record levels.

“Scotland is the 14th wealthiest country in the developed world – wealthier per head than the UK, France and Japan,” points out SNP MSP Maureen Watt. “With the full economic powers of independence we can use Scotland's wealth to invest in our infrastructure, strengthen and grow our economy and create more and better jobs for people across Scotland.”

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Published: 05 Jun 2014
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