With less than 10 days to go to the date of the Scottish referendum vote, the results of a YouGov survey out over the weekend showing that the ‘yes’ camp has gained a slight lead in the polls for the first time sent the Pound sharply lower again. The Pound is now trading at a 3 month low against the Euro, despite last week’s interest rate cut and Quantitative Easing announcement by the European Central Bank (ECB).
Against the US and Australian Dollars, the Pound is trading at a 10 month low. Another poll from TNS out yesterday showed that 39% of voters would vote against Scotland’s independence, down from 45% last month. On the other hand, 38% now said they would vote ‘yes’, a substantial rise on the 32% who answered similarly just over a month ago.
Money brokers are starting to report that some businesses and consumers have gone as far as beginning to transfer bank deposits to bank accounts based in England.
Whilst most analysts still think that the 'Better Together' campaign for Scotland to remain part of the United Kingdom will emerge victorious from the 18th September referendum poll, in a note to clients Goldman Sachs economist Kevin Daly forecast that in the event of a vote for independence there could be a run on assets based in Scotland and even a depression such as has swamped the euro zone in recent years.
In his note, Daly wrote "In the event of a surprise 'Yes' vote, the near-term consequences for the Scottish economy, and for the UK more broadly, could be severely negative" and goes on to state that in his opinion, Scotland would face a "significant budget adjustment" to make its finances work and would face a "painful" reduction in the provision of public services despite its ageing population.
For his part, Howard Archer of IHS Global Insight said yesterday that it is also likely that the Bank of England has held off from raising interest rates ahead of the Scottish independence vote due to the potential near-term negative impact that a 'yes' vote could have on the UK economy through increasing uncertainty.
Meanwhile, Rob Wood, chief UK economist at Berenberg added that a 'yes' vote could cause "serious short-term pain". Wood wrote that "Some financial firms may move south and uncertainty about currency arrangements and the status of Scotland in the EU would surge. Long term, Scotland would be forced into austerity. For the rest of the UK, losing relatively pro-EU Scotland would raise the risk of Brexit from the EU."
Of interest, Wood also wrote that "A 'no' vote matters too. A close vote would keep alive the chances of a second referendum in five-10 years, so uncertainty would remain. A 'no' vote would mean more devolution, with additional powers for Scotland probably kick-starting changes to UK regional governance."
Elsewhere, in the US, data out from the Federal Reserve revealed that outstanding US consumer credit increased by a seasonally adjusted $26 billion in July lending further evidence of a sustained economic recovery in the US.