On 18 September 2014, Scotland will vote on whether it should remain part of the United Kingdom, or whether it should become an independent state. In 1997, a referendum was held on ‘devolution’, with the majority of Scots voting in favour. This led to establishment of the Scottish Parliament in 1999, which exercises significant lawmaking powers, devolved from the UK legislature at Westminster. The main nationalist party, the Scottish National Party, won a majority of seats in the Scottish Parliament in 2011, with its main manifesto commitment being a referendum on full independence. From this point, a referendum was inevitable, and a long unofficial campaign began.
The ‘yes’ campaign has been successful in persuading Scottish voters to the independence cause. In April 2011, support for independence was just 28% (with 15% undecided/wouldn’t vote) (see here). But on 7 September 2014, for the first time, a poll showed a majority of 51% in favour of independence (the poll excluded undecideds/won’t votes). This poll, which reflects the recent trend of increasing support for the ‘yes’ campaign, has brought home the realisation that the UK — which was formed by the political union of Scotland and England in 1707 — may be on the cusp of dissolution. Naturally residents of Scotland would be most affected by this outcome, but it would be a major geopolitical event, with the UK losing approximately 8% of its economy and population. Furthermore, the UK’s nuclear deterrent, its Trident submarines, are based at Faslane on the River Clyde, and the SNP have pledged to make Scotland nuclear-free. Finally, much of the UK’s off-shore oil and gas is located in what would become Scottish territorial waters, making the UK less energy independent (although this would likely be off-set by increased shale gas production, which is anticipated in the medium term).
In response to this recent poll, the leaders of the UK’s three main (and pro union) political parties, the Conservatives, the Labour Party and the Liberal Democrats have agreed to suspend this week’s “Prime Minister’s question time” session — the centre-piece of the political week — to allow each party leader to campaign in Scotland against independence. The ‘no’ campaign has also promised to devolve yet further powers to the Scottish Parliament, under an arrangement known as ‘devo-max’ in an effort to stem support for independence. The poll has also had dramatic effects on financial markets. In the currency markets, Pound Sterling lost 1.3% of its value against the dollar and 1% against the Euro (see here). Major listed Scottish companies have lost significant value: stock in RBS fell by 1.3%, and stock in Lloyds Bank and Standard Life both fell by 2.43%. The UK Financial Times today reports that some investors are moving money out of Scotland (subscription required to access this article).
The most bitterly contested element of the referendum debate has been on economics, and on whether Scotland will be financially better-off if independent. The markets’ reaction to the increased likelihood of separation demonstrates major investor concern. The result of the referendum is too close to call, but GlobalPolicyWatch will present further analyses of key issues as the September 18 vote approaches.