We’re just two weeks away from the referendum over Scottish independence, and its opponents are beginning to panic. For months, the polls had been showing lower levels of support for independence than for continued union, and a slew of celebrities and business leaders came out in favor of staying in. But now polls are swinging in the other direction. A new poll this week has support for independence only six points behind support for union, a huge narrowing of the 22 point lead the unionists enjoyed only last month.Many attribute this swing in part to SNP leader Alex Salmond’s surprise win at a widely watched recent debate on the issue. But whatever caused it, critics are becoming more vocal in response. The Telegraph reports that Goldman Sachs is now loudly sounding the alarm (h/t Tyler Cowen):
Goldman warned that public services would have to be cut if Scotland goes it alone, and that the country would face much higher borrowing costs.
But the most worrying consequence, the bank predicted, would be that uncertainty over a currency union would cause a run on sterling and a capital flight with echoes of the eurozone crisis.
“The most important specific risk, in our view, is that the uncertainty over whether an independent Scotland would be able to retain sterling as its currency could result in an EMU-style currency crisis occurring within the UK,” wrote Kevin Daly, senior economist at Goldman.
Scary stuff—but not without justification. The late-stage nationalism that lies behind support for independence is a kind of madness, as Tom Gallagher wrote earlier this summer at TAI. We hope that voters think hard about the benefits of union when they finally go to pull the lever.