Margin for error

September 11, 2014

A Union Flag and Scottish Saltire fly over Britain's Cabinet Office in central London

Another day, another Scottish opinion poll and this time a different message, but only slightly.

A Survation survey last night showed 53 percent of Scots would vote to remain in the UK, 47 for independence. Ten percent of the electorate remain undecided. That counters three recent polls which have shown a dead heat or slight lead for the Yes campaign. Given the margin for error – three points either way – they all suggest next Thursday’s vote is too close to call although hitherto, Survation has consistently put support for independence higher than other pollsters.

There is a chance that the dramatic narrowing of the polls – with one giving a lead for the Yes camp – has come too early for the nationalists as it makes all Scots realize that their votes count and concentrates minds. It is easy to vote for independence if you don’t think it’s going to happen and there is a week still to weigh up the consequences.

There is mounting evidence of the economic pain that could be inflicted north of the border. Lloyds Banking Group confirmed our recent scoop last night, saying it would set up legal entities in England i.e. relocate south. And Royal Bank of Scotland said it would base itself in London in the event of a Yes vote.
Scottish banks are increasingly concerned about worried customers looking to move funds out of the region because of fears over the impact of independence.

Adding to that, Bank of England Governor Mark Carney said a currency union as sought by Alex Salmond was incompatible with sovereignty and that Scotland would need its own central bank with currency reserves worth at least 25 percent of GDP, something in the order of $50 billion – money that would have to be stumped up by Scots.

Salmond has had great success accusing the UK authorities of trying to bully Scots into voting No and all this may just feed that sentiment. On the other hand, in what has been an incredibly energized campaign with an unusually informed electorate, it gives a lot of food for thought.

European Central Bank President Mario Draghi will give the keynote dinner speech at Milan’s Eurofi Banking Conference this evening. A clutch of his colleagues are speaking earlier in the day.

Having played what could be his final cards to drag the euro zone out of its malaise, Draghi has put the ball firmly in governments’ court. Draghi does not advocate the EU abandoning its debt limits (which, by the way, already have built-in leeway which can be exploited) but sees scope for public investment programmes and lower taxes.

The French government’s admission that it will take until 2017 to get its budget deficit back to 3 percent of GDP may not be what he had in mind but then Germany’s refusal to countenance any more public spending despite a record budget surplus in the first six months of the year probably isn’t either.
Barack Obama came up with his elusive strategy for tackling Islamic State militants, saying he would authorize air strikes in Syria for the first time as well as more attacks in Iraq.

There is, given America’s recent history in the region, no question of ground troops being deployed. Obama pledged to degrade then destroy IS, something U.S. officials concede will take years. He asked Congress for $500 million to train and arm “moderate” Syrian rebels, a request which has broad support.
Obama expended serious effort at last week’s NATO summit wooing allies for action against the Sunni militants. Some in Europe – France and Britain for example – may well sign up in some capacity but diplomats say he must also get support in the Middle East and persuade Sunni Muslims in the region that IS poses them a threat too.

To that end, Saudi Arabia will host a U.S. training effort for Syrian rebels, senior U.S. officials said.

EU ambassadors decided to delay imposing new sanctions on Russia and will meet again today. U.S. government sources said the United States and European Union are drawing up a plan to stop billions of dollars of oil exploration in Russia by oil giants Exxon and BP by banning U.S. and European companies from helping searches of Russia’s Arctic territory deep seas or shale formations for crude.

Ukraine’s president said Russia had removed the bulk of its forces from his country, raising hopes for a peace drive. But Russia flexed its muscles by test-launching an intercontinental nuclear missile and Vladimir Putin has just ordered snap checks of his army’s combat readiness in the Far East.

Britain’s RICS housing survey, out overnight, showed prices rose at the slowest pace in a year during August.

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