By Nadex.com
Over the last month the ‘Yes’ campaign for the Scottish referendum on independence has seen a dramatic increase in support, closing the 22-point gap with the Better Together campaign. On Saturday, a new poll showed that 51% of respondents were in favor of an independent Scotland – the first such lead for the ‘Yes’ camp so far. When markets opened on Monday the UK stock market has seen a massive decline along with a 1.3% drop in the value of the pound.
The ‘Yes’ campaign’s final surge, which results from gains from women, artists and Labour supporters, partly reflects reduced concerns about future economic welfare if Scotland does leave the UK. Pro-independence teams say that Scotland will be able to look after itself using revenue from North Sea oil among other industries such as construction and tourism. In 2013 the UK exported a massive £39.3bn worth of oil to the rest of the world. Losing this to Scotland would be detrimental to the UK’s large current account deficit and could result in a rapid downward spiral for the economy. It would however, be a massive support to Scotland, which ‘Yes’ leaders say would become one of the wealthiest countries in the world. They have promised to protect the NHS from privatization, and create more jobs and more power for their country.
A ‘slow and steady wins the race’ approach by the pro-independence group seems to be working in their favor in gathering more and more supporters with fewer gaps in gender. However their plan to stick with the pound could be seen as risky for many who witnessed the booms and busts of Ireland and Spain when they adopted independent fiscal policy while still maintaining a shared currency with other countries. With little control of central banks decision-making Scotland could quickly fall victim to a massive depression if they run out of money and require financial support from the Bank of England.
With the potentially massive effect Scottish independence will have on the rest of the UK, it is unsurprising that the Prime Minister, David Cameron, is now offering more powers to Scotland to convince voters to opt for ‘No.’ However, the carrot of more powers will be familiar to Scots as they were promised the same thing by Labour party members and Conservative leader Edward Heath when they had a referendum in 1979 for a Scottish parliament, but instead plans for devolution were stopped during conservative government under Thatcher’s power. Pro-independence leaders argue that devolution is not enough, as Scotland will never gain enough power on the issues its residents believe are most important.
Major FTSE 100 members with links to Scotland such as the Royal Bank of Scotland and Lloyds Banking Group suffered declines in their share prices, on the back of the recent poll results ahead of the referendum. They have since admitted to have drawn up contingency plans to move to England depending on the outcome of the referendum. The pound would be expected to suffer a dramatic decrease in value in the case of a Yes victory due to uncertainty about the economic impact of Scotland leaving.
Free Reports:
Although businesses and the majority of the UK had assumed the outcome of this referendum was going to be a resounding ‘No,’ it currently appears too close to call. We have already witnessed a large decline in GBP/USD with traders looking to sell their positions on the pound. GBP/USD trading volume and volatility increased heavily today after news of the poll was released over the weekend. Traders who enjoy such conditions may wish to explore trading GBP/USD forex binary options on the Nadex exchange.
Article provided by Nadex.com
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