The price for Scottish independence / Source: bbc.com
Tomorrow, September 18th, 2014 the UK will hold one of it most important poles in order to decide if the Scottish population desires to continue as part of the United Kingdom or if it wants to have an independent country. This all started when the Scottish National Party(SNP) won the parliament elections in 2011, allowing them to call the vote. Backing their desire for independence, the SNP’s leader says that considering that almost 90% of the oil and gas supply from the UK comes from Scottish land, if they were an independent country they could be one of the richest countries in the world. However, the opposition says that oil, being a non-renewable resource, will one day end and, therefore, basing the future of an entire nation in solely one scarce resource is a foolish move.
Leaving all of the political discussion aside, this independence movement will, and already has, had an impact in the economy of the UK and of Scotland if the voting turns out “YES”. Due to all the uncertainty around what will happen tomorrow, investors are unwilling to invest in in the UK, therefore, their money would be more expensive for the UK. This results in less investments form business and less consumer spending, thus, explaining why the sterling has been in decline. Not only that, but if the the vote results in a “YES”, Scotland would need to adopt a new currency since the UK has already declared that there is no way that an independent Scotland would be allowed to use the pound. This would cause somewhat of a trouble for Scotland because without an established currency it is harder to attract investors. Also, this would be bad for the rest of the UK since they would lose their main source of oil and natural gas, thus, making it very likely for their debt to start increasing. In addition, if the vote is result in the Scottish independence, it is more than likely for the sterling price to continue in decline since the investors would still be hesitant to put money into the UK and Scotland until all of the separation negotiations are concluded.
If the result says that Scotland remains as part of the UK, the investors hesitation would end in the day following the results, stabilizing the sterling price and resupplying the businesses. Therefore, it is impossible to tell what will be more beneficial for the economy from both countries in the long run, however, tomorrow’s voting has already had some impact in the economy. Despite the results, tomorrow’s voting will definitely cause some changes in Scotland and in the UK.