SNP may seek new independence referendum

Reports that the Scottish Nationalist Party (SNP) could call for a second referendum on independence after Prime Minister Theresa May triggers Article 50, the two year clock on formal negotiations with the European Union, sent the pound tumbling on Monday morning.

According to The Times, the government is preparing for a “devolution crisis” as it embarks on Brexit negotiations with the EU.

While Britain as a whole voted to leave the EU by 52% to 48%, Scotland voted to remain by 62% to 38%, and the SNP believes that this gives credence to a second vote on independence, before local government elections in May.

It has been suggested that the SNP could call for ‘indyref2’ at its next party conference on 17 March, less than three years after Scotland voted against independence by 55% to 45% - but before the Brexit vote changed the political landscape.

Holyrood can not call a referendum without agreement from Westminster, as per section 30 of the Scotland Act.

PM May could refuse to allow a second referendum but this could cause a constitutional crisis or call one after Britain leaves the EU. The Times said that the SNP would want the vote to take place in the autumn of 2018, before Brexit.

A Downing Street spokesperson told Reuters: "The question is not whether there could be a second referendum, it is whether there should be one - and the clear answer to that is no. The threat of one is creating unnecessary uncertainty and division."

The upcoming elections in Northern Ireland are also weighing on the government and possibly direct rule for Stormont, with Northern Ireland also having voted to remain in last June’s EU referendum, by 56% to 44%.

Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: “The UK’s decision to quit the European Union had immediately triggered questions regarding Scotland’s future in the United Kingdom.

"However, the eventuality hasn’t been largely factored in the pound’s value so far."

She said if Scotland decided to proceed with the second referendum to quit the UK, there was likely to be another fundamental downshift in the pound’s value against the dollar and the euro.

“Although there is no need for additional panic at this point in time, the week started with Brexit related concerns and the current deterioration in the sentiment could dent the appetite in the pound and encourage more bears to join the sell-off," Ozkardeskaya said.

The pound fell 0.46% against the dollar to 1.2405 on Monday morning and was down 0.62% verses to the euro to 1.1724.