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.

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