Sterling was spooked yesterday by a series of polls showing that Scots were increasingly weighing up the merits of a vote for independence despite the advice of the massed ranks of the established political parties at Westminster, the financial services sector and the London media.
The British pound fell more than 1 per cent against the dollar to $1.6141 – its biggest one-day drop in 13 months – long-dated government bonds tumbled and £3.5 billion (€4.37 billion) was wiped off the market value of six London-listed companies with large exposure to Scotland.
Given all the headlines, it might be hard to recall that there were, in fact, two polls on the question of the Scottish vote at the weekend. The YouGov survey for the Sunday Times grabbed all the attention as it was the first to find a majority in favour of independence at 51 per cent. But a separate poll by Panelbase, ironically commissioned by the pro-independence campaign, showed support still short of a majority at 48 per cent, albeit rising. A further poll, published yesterday by TNS, has the two sides neck and neck on 41 per cent. But whatever about the questions over the YouGov poll and its 22-point swing, two things seem increasingly clear.
First, unsurprisingly, the Scots are fed up with being told what is good for them.
That didn’t stop the Conservative-led coalition government rushing to promise more devolution “goodies” if only the Caledonians would see sense and vote to preserve the UK’s 307-year union.
Nor did it temper the language of City analysts, with Deutsche Bank urging voters to "be afraid, be very afraid".
And that brings us to the second issue. For all those warning of chaos north of the border, yesterday’s market reaction points to concern about potential upheaval politically and economically for the UK as a whole.
“The implications of a Yes vote would be huge, and are magnified by the sense of institutional unpreparedness,” Deutsche Bank said, warning darkly that “a Yes vote could easily derail the UK economic recovery”.
Others rowed in along the same lines, with Morgan Stanley suggesting a Yes vote next week could knock 10 per cent off the value of sterling.
Both sides could yet lose, it seems.
