Columnist Craig Stephen is writing this week from his native Glasgow.
GLASGOW (MarketWatch) — It was never supposed to get this far. Tomorrow, Scotland votes to be an independent nation after two years of campaigning and debate with everything still hanging in the balance. The result should have already been a foregone conclusion: Scare people enough about losing the pound in their pocket and nothing else matters.
This was part of a two-pronged pincer move to outflank the yes vote.
By denying Scotland the right to continue using sterling GBPUSD, +0.15% in the event it voted for independence, the opposition created a pretext to conjure up all number of doomsday predictions — from business and banks fleeing, grocery prices going up, to financial instability and ruin.
The other half of this plan was to veto the more moderate “devo-max” option on the ballot, which included further devolution within the existing union.
Sterling has been at the heart of referendum debate as Westminster warned: You can have your freedom but you cannot have your pound.
Therein lay the ultimate checkmate on independence. With Chancellor George Osborne co-opting all three Westminster parties into an unlikely alliance with his intransigent currency stance, the resulting uncertainty strips the historic vote on Scotland’s future to a binary decision — pound or no pound.
Westminster warned: You can have your freedom, but you cannot have your pound.
But 10 days ago this high-risk bluff began to unravel. As polls swung for the first time to put the yes campaign in the lead, a sharp fall in the pound rattled markets and Westminster lurched into panic mode. A last-minute “devo-something-extra” was hastily cobbled together, as the leaders of the three main Westminster parties shuttled up to Scotland. We even had the tragic figure of Gordon Brown dragged from obscurity to help save the union.
This poll reversal was a game changer, however, as it suggested the Scots did not believe the posturing over the pound or they were willing to look past the financial uncertainty for something more.
It is still perplexing that the currency issue was ever allowed to become so pivotal. Perhaps the calculation was simple: if you repeat the no-pound mantra often enough, the public will take it as gospel rather than a high-stakes gamble.
Sterling today is a freely convertible, internationally traded currency available to any country in the world to transact. Just how Westminster plans to stop Scotland from using its shared currency is a puzzle. If the successor U.K. government’s plan really were to make sterling nonconvertible, it would have dire consequences for the City of London.