A few months ago I spoke on a panel in London at an event organised by Retties and Kleinwort Benson to discuss the implications of Scottish independence, or failing that ‘devo max’.
Hundreds of people were invited, not many replied, and about 20 came.
We presented. There were no questions. Then, eventually a bored looking man at the front put up his hand. “Why should I care?” he asked. This floored all of us rather. We had simply assumed that everyone cared about the possible break-up of the regions making up the world’s sixth-largest economy.
It’s a point James Mackintosh picks up in the FT today. The willingness of the UK’s investors to ignore the entire issue suggests, he says, quite a degree of “complacency”. Why? Because it does matter.
Right now, the polls increasingly suggest that the Scots are likely to vote to stay in the union, but if they don’t, the whole of the UK will face a period of stunning political uncertainty about everything from monetary policy to border controls and even the nature of the next rUK election.
It is “impossible to think that bond and foreign exchange markets would not react badly” to all this.
But it isn’t just the short-term financials that the rest of the UK should worry about. We can’t begin to forecast exactly what the effect on everyone will be of the five million-odd Scots leaving the union, but we are already a smallish country, so it seems likely that the rest of the world would seize on the change to force a discussion of the UK’s global role.
Will a reduced UK still be a nuclear power? Will it still have its permanent seat on the UN Security Council? Sir John Major has said he doubts it, and Vice-Admiral John McAnally doesn’t think so either. Instead, he says, Scotland and England will be reduced to “two struggling nations on Europe’s periphery”.
The UK would also be likely to lose even more influence in Europe: at the moment, in terms of member-state population size, it is part of the ‘big three’ after Germany and France. Without Scotland, the UK falls behind Italy.
Look at it all like this and it seems clear to me that while a break-up of the union won’t be great for people living in Scotland, it won’t be much good for those living in England, Wales and Northern Ireland either.
PS There has been talk of Scotland having its own stock exchange if we vote yes. The London Business School has just released a report on how the ‘Scotsie 100’ – the Scottish companies listed on the London Stock Exchange – would have done if their index actually existed.
It isn’t bad: since 1955 investors would have seen an annual return of 5.7% a year in real terms (dividends reinvested). But it isn’t great either: investing in the rest of the market would have produced 6.8% a year.