Scotland's Shares; Mark Carney Warning

 

Scottish shares Down Again

Scottish based companies and banks suffered with their shares slipping for the second day running due to the uncertainty surrounding Scotland's independence referendum raising concerns, of a possible Yes vote.

The FTSE 100 was 5.7 points lower at 6,829, with Perth-based energy firm SSE and Royal Dutch Shell, both down 1.4%, among the main fallers.

The pound was just above 1.60 against the dollar after big losses on Monday. The pound was down on the euro, at 1.25.
Whitbread fell 0.18%, having risen sharply earlier after a trading update.

Supermarket chain Morrisons rose 3% after analysts at Citi placed a buy note on the stock amid hopes that the chain will preserve its dividend at half-year results on Thursday.

Other risers included Lloyds Banking Group, which recovered some of Monday's referendum-driven weakness to rise by 1.1p to 73.3p.

Investors were stepping aside until the outcome of the Scotland referendum on 18 September. Brokers are being cautious, and doing nothing with Scottish stock.

Mark Carney at the TUC Conference

Mark Carney the Bank of England addressing the TUC Conference said that a currency union in the event of Scottish independence would be "incompatible with sovereignty".

Mark Carney told the TUC conference that a currency required a centralised bank and shared banking regulations. Adding that common taxation and spending were also needed.

The Scottish National Party (SNP), wants to keep the pound in the event of independence, said that its plans had been "considered in detail" by the Fiscal Commission, a working group of the Scottish government.

An SNP spokesperson for Scottish finance minister John Swinney said: "Successful independent countries such as France, Germany, Finland and Austria all share a currency - and they are in charge of 100% of their tax revenues, as an independent Scotland would be. At present under devolution, Scotland controls only 7% of our revenues."

Well of course they do, France, Germany and Finland are all in the EU and use the Euro.
We didn’t need a working party to come to the conclusion that France, Germany, and Finland were in the euro zone. It just goes to show how well informed the SNP are on fiscal polices.

If Scotland does manage to join the EU they too will share the same currency as France, Germany and Finland. If that is what they want, the best of luck to them.
The Conservatives, Labour, and the Liberal Democrats have all come out against a currency union with an independent Scotland.

The SNP spokesperson said that "the political position of the three Westminster parties... will of course change after a Yes vote."

"And as the momentum builds behind the Yes campaign, their currency bluff has well and truly been called," the spokesperson added.

Unproven currency

However, the pro-union "Better Together" campaign said that Mr Carney's comments "blew a hole in Alex Salmond's assertions that a separate Scotland could sign up to a currency union with the rest of the UK and still keep control over tax, spending and borrowing."

Alistair Darling, the leader of the campaign, said: "It would mean what would then be a foreign country having control over our economy. That's why a currency union would be bad for Scotland, as well as the rest of the UK."

Scotland would either have to "rush to adopt the euro" or "set up a separate unproven currency," he said.

Mr Darling added that uncertainty over the economy "puts jobs at risk."
"It means a weaker economy and less money to spend on our NHS," he said.

BBC economics editor Robert Peston said that the coalition parties and Labour feared that an independent Scotland in a currency union could "live dangerously beyond its means and borrow on a scale that degraded sterling".

He added: "There was no way that the Tories, Labour and LibDems could allow full budget-making freedom to Scotland even as part of the UK, because to do so would make their argument against monetary union with an independent Scotland look inconsistent and hypocritical.

Related Articles: Scotland's 3 Big problems"> : Scotland's NHS, info :Alex Salmond determind to use UK Pound : Scotlands Currency Debate : Scotlands Plan "B"Scotland Child Guardian Act : Scotland and the UK Pound: Scotland's Independence | The Cost : Will Scotland be better off Independent : Scotland's YES campaign gaining ground : UK and Scotlands Independence : Scotland's Independence Scottish Parties Conferences : Scottish Referendum Probabilities and Possibilities: Salmond chases Female vote: Scottish CBI Back 'NO' Vote : Billions of pounds will flow from Scotland with 'Yes' vote : Alex Salmond reckless Gamble with Scotland : Scottish Independence,is it viable? : Salmonds Dream Shattered | Blog | Scotland the Brave : Blog | Gordon Brown and Dream Team :Transport and an Independent Scotland : Scotlands Referendum

If you like this article, hit the “Like” button.

Vic Farron RFT Express.
Follow us on Twitter :::Be a fan on Facebook :: and Blogspot   [comment on Blogspot and our Hosted Blog, all high Google Page Ranks ] ::Bookmark this page using the ‘Share’ button'

3 Big Prolems with Scottish Independence

If Alex Salmond wins the Referendum for Scotland to become independent, it seems more than likely to finish his career in politics.

The 3 biggest problems about gaining independence are:

1. The Currency.
2. Joining the EU.
3. Scotland’s inability to borrow at reasonable rates.

1) The Currency

Salmond is still trying to convince the Scots that they will still use the GB pound and there will be no change. I don’t think there is another Scot in the world who believes that. The GB pound is printed with the words “Bank of England” and underneath this heading it says “I promise to pay the bearer the sum of xxx pounds” There is then the following statement ‘London for the Governor and Company of the Bank of England’ this is followed by the ‘signature of the Chief Cashier’

No mention of Scotland.

The Bank of England act as the Lender of Last Resort, which means it underwrites the UK borrowing, and the bank deposits of peoples savings. This is for the UK, not an independent country such as Scotland, France or any other country.

Because the UK has a powerful Lender of Last Resort, the UK government and UK banks can borrow at very low rates. The UK population have the reassurance that their money is safe in their bank, and that they can buy their homes on cheaper interest rates.

An independent Scotland will not have this. They know that they will have to pay a higher interest rate on their mortgages, credit cards and loans. They don’t know what currency they will use, and they don’t know who will be their Lender of Last resort will be.

The obvious course of action would be a new Scottish Currency, until such time as Scotland joins the EU.
Scotland will have to try and convince its trading partners that the new currency is backed up with something solid; otherwise the currency will be worthless outside of Scotland. Alex Salmond has said he will build up reserves from the oil revenue. That will take time, in the meantime cuts in public spending; increased taxation and higher interest will be the only course open to Scotland.

2) Joining the EU

On the date Scotland is declared Independent, it will leave the EU. Alex Salmond expects to successfully negotiate joining the EU on that date. If he is successful, Scotland will revert to using the Euro.
The chance of him negotiating entrance to the EU are slim. Several countries have indicated they will vote against entry.

If successful an independent Scotland will be able to borrow from the European Central Bank, the trouble is it could take several years to gain entry, and it is forecasted it will take several years to agree what assets are jointly owned by a smaller United Kingdom and the new evolved Scotland.

3) Scotland’s inability to borrow money.

Alex Salmond’s constant boast that he will default on Scotland’s debt to the UK has worried countries all over the world. If Scotland does manage to join the EU, every EU member will have to contribute to the ECB to lend Scotland money. If he is prepared to default on his countries debts to Great Britain, nobody will vote him into the EU, and have him defaulting on Scotland’s debt. Nobody will lend Scotland money knowing he is prepared to default on Scotland’s debt to the United Kingdom, which he has been a part of for 300 years.

As I said, if Alex Salmond wins the Referendum for Scotland to become independent, it seems more than likely to finish his career in politics.

Now you know why some financial institutions and companies are preparing to migrate south of the border, if Scotland gains independence.

According to the latest polls 50% on the Scottish people are prepared to vote ‘Yes’ , and take a leap in the deep unknown.
Read what the experts say:
Alex Salmond’s own former economic advisor, Professor John Kay, said: “The choice of currency would be the most important economic decision for an independent Scotland. All aspects of economic policy, including fiscal and
monetary arrangements, are contingent on that choice.”
Professor John Kay Former economic adviser to Alex Salmond & Professor of Economics at the London School of Economics said: If I represented the Scottish government in the extensive negotiations required by the creation of an independent state, I would try to secure a monetary union with England,and expect to fail … So Scotland might be driven towards theoption of an independent Scottish currency.“Alex Salmond has said I think rather stupidly that there is no plan B. The trouble with having no plan B is you don’t have any negotiating power if you don’t have a Plan B. So there hasto be a Plan B. And Plan B has to be an independent currency.”
Brian Quinn Former Executive Director of the Bank of England & Honorary Professor of Economics and Finance at the University of Glasgow said: “The concept of a shared system of supervision and crisis management is seriously - perhaps fundamentally – flawed and that its weaknesses would increase during theindeterminate period of transition following independence.
This, together with the uncertainties regarding Scotland’scontinued use of sterling arising from its proposed membership of the EU, are likely to result in higher prudential requirements for Scottish financial institutions. In these circumstances it would not be surprising if they reconsidered their group structures and main domicile.”
As a consequence of the chance of a 'Yes' vote the GB Pound fell by 1.3$ against the US dollar, and 1% against the Euro.

Shares in Scottish-based firms suffered sharp falls on the stock market. Edinburgh-based Standard Life closed 2.43% lower on Monday, Royal Bank of Scotland slipped 1.3% and Lloyds Banking Group, which owns Bank of Scotland and Scottish Widows, dropped 2.43%.

Perth-based energy supplier SSE, Glasgow pumps specialist Weir Group and fund manager Aberdeen Asset Management also all fell between 1% and 2.25% over the course of the day.
Read what the Scottish Farmers say.

Related Articles: Scotland's NHS, info Alex Salmond determind to use UK Pound : Scotlands Currency Debate : Scotlands Plan "B"Scotland Child Guardian Act : Scotland and the UK Pound: Scotland's Independence | The Cost : Will Scotland be better off Independent : Scotland's YES campaign gaining ground : UK and Scotlands Independence : Scotland's Independence Scottish Parties Conferences : Scottish Referendum Probabilities and Possibilities: Salmond chases Female vote: Scottish CBI Back 'NO' Vote : Billions of pounds will flow from Scotland with 'Yes' vote : Alex Salmond reckless Gamble with Scotland : Scottish Independence,is it viable? : Salmonds Dream Shattered | Blog | Scotland the Brave : Blog | Gordon Brown and Dream Team :Transport and an Independent Scotland : Scotlands Referendum

If you like this article, hit the “Like” button.

Vic Farron RFT Express.
Follow us on Twitter :::Be a fan on Facebook :: and Blogspot   [comment on Blogspot and our Hosted Blog, all high Google Page Ranks ] ::Bookmark this page using the ‘Share’ button'