Scottish Referendum looks close, politicians panic and markets tumble. What if Scotland really does vote Yes?


Following Alan Renwick’s piece (posted on this blog yesterday) suggesting Scotland could buck the referendum trend and vote Yes, Robert Hazell explores reactions to increasing uncertainty over the outcome and considers the implications of a Yes vote.

The Scottish independence referendum is now two weeks away, on 18 September. With the latest YouGov poll showing the No campaign’s lead narrowing, to just 53% against 47% it suddenly looks as though there is a real possibility that Scotland might vote for independence in two weeks’ time. This has caused panic at Westminster, it has spooked the markets, and it has finally got people south of the border thinking about the consequences, for Scotland and the rest of the UK.

First, the panic at Westminster. On 4 September the Guardian ran the remarkable story ‘PM could face calls to postpone UK election if Scots vote for independence’. The argument being advanced by some Conservatives was that Westminster should postpone the next UK election by 12 months in order to avoid the unstable prospect of a Labour government dependent on Scottish MPs, who would disappear part way through the next Parliament. The Guardian reported that

‘Well placed members of the government have already started to consult the laws on postponing elections. An Act of Parliament would have to be passed, but there are complicating factors. The Fixed Term Parliaments Act of 2011, which stipulated that the next general election would take place on 7 May 2015, would have to be repealed. The House of Lords would also be able to block the legislation … One former law officer said: “Parliament can change elections, it can do what it likes. But it would be difficult.”’

For difficult, read impossible. Under the Parliament Act 1911 the House of Lords has an absolute veto over any attempt to extend the life of a Parliament beyond five years. It is hard to conceive of circumstances in which the Lords would agree to postpone the 2015 election, whose results are unknown, with only one possibility being a Labour government dependent on Scottish MPs. More likely might be postponement of the Scottish Parliament elections due in May 2016, if (as I have previously forecast) the independence negotiations take longer than 18 months. But even that would be unlikely to happen without the support of all the main parties in the Scottish Parliament.

Next, the markets. They have finally begun to wake up. Sterling plunged to a five month low against the dollar on the back of the YouGov poll. That is just the beginning of what could be a very jittery two weeks. Business and finance hate uncertainty. In Canada in 1995, when in the last two weeks of the campaign it looked as though Quebec really might vote for independence, the Canadian dollar went on the slide, and the Toronto Stock Exchange plunged by 5 per cent. When the result came through, with the No campaign winning by just 51%, the markets recovered; but it had been a very volatile couple of weeks. A dealer at the Toronto Dominion Bank at the time reported: ‘Everyone is panicking. Spreads in Canadian dollars and bonds are so wide you could drive a truck through them. Volatility is wild’.

Finally, what if Scotland votes Yes, but shows signs of regretting it later? This is a shrewd question I was asked at a talk I gave this week to the Foreign Press Association in London. It is a real possibility, if Yes win by a small margin, but support for independence declines as the terms of independence become known. The pollsters will not stop polling: they will just reframe the question to ask ‘Would you vote Yes now you know the terms?’ If there are strong indications that Scotland would have voted No, what should the UK government do? It will have to continue to negotiate in good faith, but there are two possible safety valves. The first is the next elections to the Scottish Parliament. If held before Scotland becomes independent, and if the unionist parties win, they could block the final step to independence. The second would be to hold out the possibility of holding a second referendum, on the terms of independence. If Scotland shows signs of buyer’s remorse, it is likely that one or more of the unionist parties will reflect that change in sentiment by proposing a second referendum in the next Scottish parliamentary elections.

Robert Hazell is Professor of British Politics and Government & Director of the Constitution Unit.

4 thoughts on “Scottish Referendum looks close, politicians panic and markets tumble. What if Scotland really does vote Yes?

  1. Don’t be silly Scotland, vote for NO! Don’t repeat mistakes of some countries in Europe like Czechoslovakia (Czech rep. and Slovakia now) both economies are in mess even after 25 years! Czechoslovakia before used to be stable country. Look at Germany: east and west got together and getting stronger …together is always better…

  2. YES will win on 18th September. It was never going to be otherwise.
    With 13 ‘sleeps’ to go, on the ground it looks and feels like 2011 meets 1997 on steroids i.e. it is difficult to see YES getting less than 60% on the day, and 70% has become an outside possibility, given the recent implosion of the inept NO Campaign.
    The 2015 WM GE will be postponed. On top of the postponement reasons that have been put forward (initially by Angus Robertson of the SNP in November 2013), there is also the fact that running a GE campaign while simultaneously having the WM civil servants busily dismantling the UK as a sovereign state is like a pretty dumb-assed plan.

  3. Part of the problem is that there has been little serious discussion of what would actually happen if Scotland votes “Yes”. Much of the debate has been built around influencing the vote on the day; if Scotland votes “yes” then I don’t think it’s a massive leap of faith to say that what Westminster/Holyrood actually does in negotiations will be different from what the Unionist/SNP parties have said will happen *before* the vote. There’s a difference between “trying to persuade/spook (delete according to prejudice) Scots to vote “No”” and “actually negotiate viable and long-term beneficial terms with Edinburgh now that Scottish independence will happen”.

    I think a “second referendum” would only be viable if the first was won by a slim margin and the Unionist bloc won an overall majority in Holyrood. The door swings both ways, though. Many may vote “No” in the belief that the Conservatives will be out in Westminster in 2015; if they win and Scotland shows “seller’s remorse” would it be acceptable for the SNP to propose a second referendum in 2017?

    As for the markets, yes of course they’ll be “spooked”; they hate uncertainty. But it will be in both Westminster and Holyrood’s interests to keep that “spooking” to a minimum. Hence my belief that any actual negotiations that take place will be on different terms than those the Unionist bloc and SNP suggest for the sake of winning referendum votes.

  4. to have another referendum too soon after the first would start an unstable political climate.

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