LONDON (AP) — The British pound slid to a 10-month low against the dollar Monday and shares in Scotland-based companies fell after opinion polls suggested the campaign for Scottish independence could be edging toward victory.
A Yes vote in next week’s referendum would end Scotland’s 307-year-old union with England and plunge Britain into uncharted constitutional and economic waters.
For months, polls have put the anti-independence side ahead, but the gap has narrowed ahead of the Sept. 18 vote. One poll released Sunday put the pro-independence forces in the lead while other polls give the advantage to the No side — and the sense that the race is too close to call jolted financial markets.
At one stage Monday, the pound had fallen 1.4 percent to $1.6104, its lowest level since November. It later clawed back some ground but was still nearly 2 cents down on the day.
Shares in Scottish-based financial institutions such as the Royal Bank of Scotland and Standard Life also took a hammering, falling around 3 percent.
Analysts said with 10 days to go, markets were waking up to the uncertainties of independence, which include Scotland’s status in the European Union, its share of Britain’s national debt, its stake in North Sea oil revenue and its currency.
Pro-independence leaders say an independent Scotland would continue to use the pound, but the British government says it won’t agree to that.
Brenda Kelly, chief market strategist at IG Group, said the markets were “beginning to price in what was deemed unthinkable” — the breakup of Britain.
“One thing is certain, if we get this sort of volatility on the prospect of a Yes vote, can you imagine the reaction if we do get a Yes vote?” said analyst Michael Hewson of CMC Markets U.K. “It’s not likely to be pretty.”
Scotland joined England and Wales to make Great Britain in 1707. Now with a population of 5.3 million —one-tenth of England’s — Scotland already has considerable autonomy, with its own parliament and separate legal and educational systems.
Britain’s three main political parties are preparing to offer Scotland even more financial independence, including greater tax-raising powers, in a bid to avert a Yes vote.
Many Scots favor that option — known as maximum devolution, or “devo max” — but it is not on the referendum ballot, which asks whether Scotland should become an independent country.
U.K. Deputy Prime Minister Nick Clegg said the government would offer “far greater powers for Scotland, but within the security and stability that the family of nations in the United Kingdom provides.”
Independence advocates accuse the No side of overstating the economic risks of separation.
“Nobody argues that it is a magic wand that is going to pave the streets with gold,” said Scotland’s Deputy First Minister Nicola Sturgeon. “(But) I don’t think there’s any doubt at all the momentum is with the Yes campaign.”
The leader of the anti-independence “Better Together” campaign denied his forces were panicking.
“I’m very confident we will win the day,” said Alistair Darling, a former British Treasury chief.
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If the yes vote wins expect reverberations around the world including this country.
Christ, it was embarrassing enough for Washington to bring one poodle to heel, but now two?
I believe that Mel Gibson yells, Alba gu brath, or Scottand forever in Braveheart. I hope they get their independence from England and I hope that they write one hell of a constitution with zero ambiguity. Judging by our democracy and England’s royalty, that might want to stick with just a parliament.