Scottish Independence Debate May Hinder Business Again
The SNP has once again locked horns with the UK’s central government. They want a second referendum to decide if Scotland should leave the UK, and join the EU. Despite some serious push back from Theresa May, a wave of support for the argument has gathered momentum. Less than 3 years since Scotland voted to remain a part of the UK, we ask again how a potential “IndyRef2” will affect British markets…
Brexit And Scotland
Another week has been washed with new turbulence for British businesses, following the snowballing matter of Scottish independence once again. SNP leader Nicola Sturgeon is adamant that there is no option but to call a second referendum after the Brexit vote, pointing to the fact that her supporters did not vote to leave the EU.
With the first shots fired, Prime Minister Theresa May told the press that, “now is not the time,” as we immerse ourselves deeper into negotiations with EU countries. The exchanges continued throughout a busy week of headline-tennis, which could turn into a political boxing match.
Despite an official referendum not even yet being agreed, British markets have already been affected. The pound, already in a state of volatility, fell against the Euro after Sturgeon’s assurance that there will be a second referendum. It then bounced back again soon after the Prime Minister’s assurance to the contrary.
Oil Price Chart – Weekly Interval Since 2014:
Scotland’s Oil Price Impact
Scotland currently contributes around 8% of the UK’s GDP and most of that comes from oil. However, a two-year slump off the back of the last referendum has seen thousands of job losses. This has left some business owners in Aberdeen especially, fearing the worst. The Chief Executive of Oil & Gas UK, Deirdre Michie said: “You can see it – shops, restaurants and pubs closing, people out of jobs.”
The oil price is still around half of what it was before the first independence vote in 2014, which actually represents a recent bounce back up. But even with cautious optimism, the former Conservative councillor for Aberdeen, Jim Gifford warned: “A second referendum is the worst possible thing. It’s the uncertainty – businesses don’t like uncertainty.”
Of course, an independent Scotland may represent something of a coup for the EU having lost the UK as the 5th largest economy in the world. But under such a thick cloud of uncertainty already thanks to Brexit, any attempts at predicting the future would be very challenging.