Dismissing the chances Scotland will vote for independence from the UK, as most of the country's business and political elite have done for months, is starting to look a bit foolish.
The latest poll, by the Sunday Times, suggests the Yes vote will narrowly scrape through, after a rising tide of support over the summer.
The shock of this sent sterling tumbling in early trading Monday. The U.K.'s currency is already down against the dollar in eight of the last nine weeks – which strategists at BTIG point out is the worst performance since the Sterling Crisis in 1976. Strategists at Citi forecast that the pound could fall as low as $1.56 if the Yes vote carries the day on September 18th.
Nobel Prize-winning economist Paul Krugman warned in the New York Times that an independent Scotland would likely be "Spain without the sunshine."
This has become a battle of head versus heart, with the No camp appealing to wavering voters mainly on economic grounds. Yet the Scottish may think a period in the economic doldrums is worth it to be rid of the Auld Enemy. After all, Ireland spent the best part of a century with a struggling economy after becoming independent, and there are few there who would vote to become part of the U.K. again.
Dire warnings on the future of Scotland's economy post-independence, such as that issued by the London-based Centre for Economics and Business Research (CEBR) Monday morning, which forecast a deficit of at least 6.4 percent for an independent Scotland, may not have the desired effect.
"The fiscal pressures on the new government of an independent Scotland would be substantial," Douglas McWilliams, chairman of the CEBR, warned. Scotland's tax take from oil revenues is declining, they warn, and its financial services industry has struggled in recent years.
A series of extra powers were offered to the Scottish people by the U.K.'s Chancellor of the Exchequer George Osborne on Sunday, in a last-ditch effort to secure a No vote. This move may yet backfire.
Support for secession has often risen after leading Westminster politicians, particularly those from the Conservative Party, made a big declaration in favor of maintaining the Union – such as Prime Minister David Cameron's speech to Scottish business leaders last month.
Yet these politicians are fighting for more than just the Union with Scotland. In the long term, removing Scotland, and its more left-leaning voters from the U.K.'s own general elections, could seriously disrupt politics in Westminster.
If the left-wing Labour Party is decimated as a political force, there are concerns that greater power could be won by far right-wing parties like the U.K. Independence Party (UKIP) – or the anti-European Union forces in the Conservative Party, raising the specter of a U.K. exit from the trading bloc.
"A 'yes' vote could detract from public support for the Government Coalition and conventional parties. Should this result in greater support for more 'fringe' parties, political uncertainty could raise investor concern over the potential EU referendum and 'Brexit'," Todd Elmer, currency strategist at Citi, wrote in a research note.
- By CNBC's Catherine Boyle
