The British pound and government bond prices fell Tuesday after a new poll showed a sharp rise in support for Scottish independence, with less than three weeks to go before a referendum on the issue.
All through a year of increasingly intense debate, those against independence (the ‘No’ camp) have maintained a comfortable lead over those in favor. But a poll published Tuesday by YouGov, one of the U.K’s most respected polling organizations, showed that that the No camp leading the Yes camp only by 53%-47%.
The No campaign’s lead has withered to just 6% from 22% in the course of the last month, after a poor showing in head-to-head TV debates by its leader Alastair Darling, and some inept campaign advertizing that was slammed for its ‘patronizing’ style.
“A close finish is now likely, and a ‘yes’ victory is now a real possibility.” YouGov’s president Peter Kellner said on the company’s website.
The vote is scheduled for September 18.
It’s a rude wake-up call for financial markets, which have steadfastly refused to consider the risk of the U.K. Splitting up, and the massive disruption that that would cause to local financial markets. There is no clear sense of how Scotland and the rest of the U.K. Would divide the national debt, or vital economic and defense assets, starting with sterling itself.
There are, by contrast, massive doubts over whether Scotland would be able to stay in the E.U., and whether the English-dominated rump U.K. Would want to. Against a background of such uncertainty, business leaders on both sides of the border have fretted about a split having fateful effects on the economy.
The pound, which has been on a downward trend with the euro as the European economy has stalled in recent weeks, fell nearly a cent against the dollar to a six-month low of $1.6501, while the yield on the U.K. 10-year gilt (treasury) rose 0.07 percentage point to 2.46% at one stage, before returning to 2.45%.
“More and more people are beginning to realise that a Yes vote is Scotland’s one opportunity to make that enormous wealth work better for everybody who lives and works here,” chief executive of the Yes Scotland campaign.
That note contrasts sharply with an open letter published last week by over 130 Scots business leaders who came down heavily against independence.