Scottish Independence Gains Support as Referendum Date Looms

Scottish nationalists seeking to break away from the U.K. gained ground, cutting the lead of those in favor of the union to nine percentage points with two months left before the vote, according to a monthly poll.

Support for staying in the U.K. fell one percentage point to 41 percent while backing for independence gained two points to 32 percent, the survey by TNS published today showed. The proportion of undecided voters slipped one point to 27 percent. The lead of the pro-union campaign has dropped 10 points since the poll began in September, TNS said.

Scotland holds a referendum on Sept. 18, with the main political parties in London united in their opposition to the nationalists led by Scottish First Minister Alex Salmond. Polls have consistently shown the nationalists trailing behind the campaign to preserve the 307-year-old union, though enough people are undecided to cause an upset.

Among those who said they were certain to participate in the referendum, 46 percent plan to say No to independence and 37 percent Yes, TNS said. In the same category, the proportion of undecided voters fell to 18 percent from 22 percent, Tom Costley, head of TNS Scotland, said in an e-mailed statement.

The question of which currency a new Scottish state would use is one of the central points of disagreement. Prime Minister David Cameron has ruled out sharing the pound, while nationalists are threatening to walk away from Scotland’s liabilities unless he changes his mind. That would increase Britain’s debt as a proportion of gross domestic product.

Pound Volatility

The referendum may already be starting to rattle investors, with sterling expected to experience more volatility in the coming months. Three-month implied volatility in sterling versus the dollar -- a measure of expected price swings based on options prices -- was at 5.32 percent today. It dropped to 4.96 percent on June 9, the lowest since June 2007. Sterling was little changed at $1.7099 today, up 3.3 percent this year.

The pound risks dropping as much as 10 percent on a trade-weighted basis in the event that Scotland votes to break away from the U.K., Morgan Stanley said this week. BNP Paribas SA, rated among the world’s 10 biggest currency traders in a Euromoney Institutional Investor Plc survey this year, predicted increased volatility in the currency before the vote.

An ICM survey for Scotland on Sunday published on July 13 showed backing for independence was 34 percent this month, while support for the status quo was at 45 percent.

TNS said it polled 995 people at least age 16, the minimum to vote in the referendum, between June 25 and July 9.

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