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Analysis
Referendum legacy: Anglo-Scottish divide

Referendum legacy: Anglo-Scottish divide

Sterling nervousness as independence vote strengthens

by James Brazier and John Nugée

Thu 4 Sep 2014

The polls have narrowed, and markets are reacting. Sterling moved sharply downwards on an opinion poll prediction that 47% of Scots will vote for separation from the UK in two weeks. According to the latest YouGov survey, supporters of independence lag just six points behind the No vote. The Scottish National Party, led by First Minister Alex Salmond, has nearly eliminated what was a 22-point deficit less than a month ago.

The poll drove the pound to a five-month low against a dollar lifted by strong manufacturing data. Its weakness, amid uncertainty on what currency an independent Scotland would use, is evidence that markets' hitherto sanguine attitude has reflected their confidence in a No vote rather than indifference to the result.

The YouGov sample was taken after pundits deemed Salmond to have won the second and final televised debate with the leader of the No campaign, Alistair Darling. Rather than attempting to celebrate British accomplishments in the 300 years since the Act of Union, Darling's campaign has focused on the economic risks of Scotland's secession. This unromantic response to a spouse threatening divorce has benefited the Yes campaign, allowing it to wrap itself in the rhetoric of justice, morality and optimism.

Salmond has made much of his determination, for instance, to remove the 'immoral' nuclear weapons from the Faslane submarine base on the Clyde, while nevertheless planning to remain under Nato's nuclear umbrella. He has set himself against the Conservative-led government in London; the Tories are desperately unpopular north of the border. A Yes vote means 'always getting the government you vote for', according to SNP literature.

One alarming side-effect of such language is a surge of anti-Scottish sentiment in England, led for much of the past 20 years by two Scotland-born prime ministers, Tony Blair and Gordon Brown. The comments sections of London-based newspapers are replete with postings expressing indifference or even relief at a Scottish exit.

Such bitterness greatly increases the risks surrounding a Yes vote. For Salmond, the art is to win but to stay friends with England. A victory won at the cost of creating a bitter ex-partner, with whom negotiations would then be fraught, might indeed prove hollow.

But for Prime Minister David Cameron, the stakes are even higher. Were he to preside over the disintegration of the UK, he would face calls for his resignation. Past form suggests he would seek a scapegoat, as he found in the European Commission's Jean-Claude Juncker after the Conservatives' dismal defeat in May's European elections. Salmond would seem an obvious choice, given his unerring hostility towards Cameron's Tories. Directing the confusion and anger of his electorate towards Salmond might preserve Cameron politically, but it would make the negotiations following a Yes vote infinitely more difficult.

A more dispassionate analysis suggests that this situation is unlikely to transpire. Polls tend to narrow as election day approaches. Towards the end of 2012, they showed Mitt Romney and Barack Obama neck-a-neck, but Obama eventually won the US presidential election by a 3.7 point margin that, in hindsight, was comfortable.

Nor is there a guarantee that Salmond's bounce from the second TV debate will last for two more weeks. Salmond and the referendum campaign he has led have made Anglo-Scottish relations more brittle and divisive. Whatever the referendum result, this is a legacy that will linger, and not entirely for the better. All sides must now hope that the emotions of the campaign can be contained.

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