September 25, 2020

UK money crisis looms

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318f6776bb07670c1e36fb2257cc08ddb95781ad_620x311From The New Zealand Herald

Britain faces a period of severe economic turbulence if Scotland votes for independence this week, economists warn , as the prospect of a yes vote threatens a new financial crisis.

A report from a respected financial advisory firm said investors were already pulling money out of the UK at the fastest pace since the “credit crisis” of 2008.

CrossBorder Capital said the net flow of capital out of Britain hit 16.8billion ($33.5billion) in August, the highest level since Lehman Brothers collapsed.

Managing director Michael Howell said outflows from the UK looked to be intensifying.

“Sterling outflows have been an issue since the end of June, but they really gathered pace in August,” he said.

Meanwhile, a study by Deutsche Bank said a yes vote for Scottish independence would “go down in history as a political and economic mistake” on a par with Winston Churchill’s decision in 1925 to return the pound to the gold standard or the failures by the Federal Reserve in America that triggered the Great Depression in the 1930s.

It warned that Scotland risked a similar depression if voters backed the yes campaign on Friday, and described the desire for independence as an “incomprehensible” one that could have negative consequences “far beyond” what people had imagined.

Gordon Brown said the Deutsche Bank report showed that Scotland was “in danger of falling through an economic trapdoor”.

With the battle over independence reaching fever pitch on the final weekend of campaigning, Chancellor George Osborne announced he was withdrawing from a crucial G20 summit next weekend because of the risk that a vote for independence in the referendum could plunge the UK economy back into turmoil.

Osborne said a yes vote would have “permanent consequences” for the British economy and announced that he would not attend next weekend’s meeting of finance ministers and central bank governors in Cairns, Australia.

Mark Carney, the Governor of the Bank of England, also announced that he would return early from the meeting to be back in time for the referendum result.

As another opinion poll showed the result on a knife edge, with 51 per cent opposed and 49 per cent in favour, Osborne said they could not be abroad when the result was declared because of the pressing “economic risks” that could immediately follow.

A survey by Bloomberg yesterday predicted the pound could tumble up to 10 per cent in the event of a yes vote.

IMAG: Scottish referendum postal votes start to arrive ahead of the count on Friday. Photo / AP

  • Daily Telegraph UK

For more on this story go to: http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=11324219

Dee also iNews Cayman story published today “Scotland’s September 18 Referendum: Its consequences”

 

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