U.K. Pound recovers, stocks fall again on Scotland jitters

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Geoffrey Smith

The pound steadied but U.K. stocks continued to fall Tuesday as a new poll showed that the result of Scotland’s referendum on independence is too close to call.

Although the poll, by research firm TNS, showed a lead of one percentage point for the “No” camp, against independence, it reinforced the view that the “Yes” camp has made significant gains in the last month and could now win the vote.

It suggested a 37%-36% split against independence, with a remarkable 23% of voters still undecided with only nine days to go before the vote. That’s still basically bad news for the Unionist campaign, because recent polls have tended to show the bulk of undecided voters coming down in favor of independence.

The U.K.’s three largest political parties, the Conservatives, Labour and the Liberal Democrats, agreed on Monday to promise Scotland more powers over taxation and spending if it votes to stay in the U.K.

However, ‘Yes’ campaigners scorned the offer as ‘insincere’, and said it wouldn’t give Scotland the sort of meaningful control over revenue from North Sea oil and gas that only independence can bring.

Analysts at Deutsche Bank Tuesday warned against reading too much into the polls, pointing to the fact that they had overstated support for Quebec’s independence in a 1995 poll. But they also indicated that a win for the No camp would probably not be big enough to kill the idea of independence for good, as Westminster had wanted.

By lunchtime in London, the pound was around half a cent higher against the dollar at $1.6115, but that’s still down 2 cents from Friday’s close, before a poll by YouGov showed the ‘Yes’ camp winning. That pound had badly rattled financial markets, which had not taken the threat of separationseriously before.

The pound came off intra-day highs Tuesday after Bank of England Governor Mark Carney indicated in a speech that he won’t start to raise interest rates until next spring. Figures released earlier had showed the first quarterly drop in industrial out in a year and a half.

While the benchmark FTSE 100 stock index continued to fall, the companies based in Scotland which suffered the most Monday were among the better performers. The biggest losers were rather oil giants BP Plc  BP  and Royal Dutch Shell Plc  RDSB .

Although these companies might face particular legal risks and a higher tax burden in the North Sea under an independent Scotland, they appeared more under pressure from the sharp recent fall in oil prices. Crude has fallen 14% over the last three months, and had hit a 15-month low Monday on signs of global oversupply.