Scottish Devolution Will Have a Profound Effect on the Global Financial Markets

All that is certain about the Scottish independence vote at this time is that we have a great deal of uncertainty. The biggest question is, of course, whether the vote will be in favor of independence.

If the vote is “yes”, how easily and how well will the new country be constituted? How strong will it be economically? To what extent will it gain acceptance among the other countries in Europe and in the world? The most important question is: What will happen to the remaining England? Will it lose its global clout? Will it be relegated to a position of insignificance? Will it lose its permanent seat in the UN Security Council? Will its currency lose its dominant position in the world financial markets? Can England retain its position as a leading country?

There is little doubt that Scotland as an independent country will struggle for years to emerge as a competitive nation. The subject of what currency and what banking system it will use will take some time to sort out. When it comes to the remaining England, the questions are even more important and vexing. London has made it known that it would not accept Scotland’s pound as a partner in a parallel currency scheme. That may be so, but will the Bank of England have a choice? An England without Scotland would be a smaller economy. The pound could lose substantial value and could lose its global acceptance as a key currency.

September 18 is thus a major milestone in the UK’s history and the outcome of the referendum will have a lasting and profound impact.