Should Scotland be an independent country? With hours to go for the Scots to make a choice in the historic referendum tomorrow, the race is now too close to call for the eligible 4mn voters. But what is clear is a “Yes” vote, once thought to be a pipedream, has now become a serious possibility.
Why did the support for “Yes” grow especially as the campaign was winding down?
The Nationalists group, mainly led by Scottish First Minister Alex Salmond, argues domestic oil reserves combined with well-developed service and manufacturing industries would help make an independent Scotland one of the wealthiest countries in the world. For years, the Scots have been concerned that the government in London, with only a 9% Scottish representation, has often failed to reflect their cause.
Unionists invoke scenarios ranging from an independent, but ‘weaker’, Scotland not able to keep the pound, transitional uncertainty and the exodus of businesses.
The financial world is worried about a Scottish secession. Here are some key questions. What share of Britain’s debt would Scotland take? Would it be able to keep the pound? How much of oil revenues from the North Sea would Scotland get? Would it follow a different fiscal policy? Can it join the European Union?
What is certain, though, is that minus Scotland, Britain would slip down the ranks from being the world’s sixth largest economy. Scotland’s gross domestic product totalled $240bn in the year to the first quarter of 2014, accounting for around 8% of total UK GDP.
The UK is Europe’s biggest destination for foreign direct investment. Without Scotland those flows would fall and the rest of the UK’s current account deficit could rise to a level that discomfits investors.
A number of major Scottish-based financial companies could head south from an independent Scotland. The Royal Bank of Scotland said in June it was considering its options should Scotland vote for independence, while Lloyds Banking Group reportedly is considering having its registered office in London rather than Edinburgh if Scotland breaks away. Oil giants Royal Dutch Shell and BP have said they want Scotland to stay with the UK.
British Prime Minister David Cameron warned during a visit to Scotland on Monday that if the country voted for independence, it would not be a “trial separation” but a “painful divorce”. The International Monetary Fund said a Scottish “Yes” could create ripples in global financial markets in the short term and the longer-term impact could be decided by transitional policies adopted by both governments.
The Scots now have a call to make, independently and unambiguously, about its 307-year union with the Great Britain. While a “No” can largely keep the status quo for the investment world with its merits and demerits, a sensational “Yes” can leave far-reaching consequences, including the UK’s possible exit from the EU.
