For two weekends in a row the YouGov polls have shown the gap between the ‘Yes’ and ‘No’ votes over Scottish independence becoming very close, and city traders have begun to take considerably more notice. Only a matter of weeks ago this was broadly viewed as a forgone ‘No’ conclusion.
A snapshot of the major companies that are either based in Scotland or have a sizable exposure to the Scottish markets shows that they have bounced in early morning trading. It is debatable what the catalyst for this move is; either the latest polls from Survation or YouGov’s overnight poll – where the ‘No’ vote regained the lead – or the consequence of all the major parties leaders heading up to Scotland yesterday.
The sector most at risk from the break up in the union is the financial one. Recent reports have indicated that almost 200,000 jobs are both directly and indirectly dependent on the Scottish Financial sector – roughly 7% of the Scottish workforce. More pertinently this accounted for £11.2 billion of earnings in 2012 and 86% of this came from sales to the rest of the UK.
The Royal Bank of Scotland has now stated that it would have to move its headquarters out of the country if the vote is a ‘Yes’, although not necessarily all of the back office workers. When you also take into consideration that the majority of the company is owned by the British (not Scottish) taxpayer, it is unlikely that the Bank of England would be willing to let it remain outside its border.
To a smaller extent, the same is true of Lloyds. Standard Life has been the most proactive and vocal of the Scottish companies, stating some time ago that it was planning for a relocation of the company. Aberdeen Asset Management has remained tight-lipped about this, merely stating that, should Alex Salmond get his way, the 18-month hand over period would be enough time for it to assess the implications and react suitably.
Drinks manufacturer AG Barr sees over 40% of its business coming from the Scottish market but, regardless of the result of the referendum, an upturn in consumption of Irn-Bru could well benefit. Diageo has almost 30% of its spirits manufactured in Scotland through its various whisky brands, but considering its dependency on the pure peaty waters of Scotland it is not as if this company would be able to relocate.
Energy companies could be some of the most affected by the upcoming vote, with Cairn Energy and SSE having a quarter and around 40% of their respective assets inside the country. John Wood Group generates almost 20% of its revenues from inside Scotland.
This last week has seen both politicians and companies add their opinion to the debate. Dates to be aware of in the run up to voting day on 18 September are a panelbase poll this weekend, and three polls from YouGov, Mori and Survation on 17 September.