According to financial giants JP Morgan, the current constitutional situation in the UK has put Scotland on course to hold a referendum to vote for independence and introduce its own currency before the UK leaves the European Union in 2019.
Who is JP Morgan? Well if you haven’t heard the name before then what you need to know is that JP are a global financial services firm with assets of $2.6 trillion, operate in more than 60 countries, have over 240,000 employees and have an annual profit that would dwarf the GDP of many a medium sized country. In the financial world, when JP Morgan make a prediction, they are normally right and the financial world listens.
Malcolm Barr, an economist at JP Morgan, said that there will be “pressure to hold a new referendum on Scottish independence” as the UK seeks a deal with the EU following its vote to leave the European project.
“Our base case is that Scotland will vote for independence and institute a new currency at that point ,” Barr said in a note to clients on Wednesday.
This is all the more embarrassing for the UK Government because this Research is the type that gets distributed to the financial world as a whole for the purposes of future planning.
UK lawmakers are expected to try and establish access to the single market without accepting free movement of labour or contribution to the EU budget which is the equivelant of trying to remove the eggs from a cake after baking. You cannot have one without the other and the EU will not allow a member of the single market to derogate one of the four fundamental freedoms of that market? Why? Because the four fundamental freedoms ARE the single market. Without them it would no longer be the single market, the same as without cement, your house would fall down!
This means that UK is likely to end with “curtailed” access to Europe’s market, according to JP Morgan.
“The hit from EU exit will demonstrate itself as a persistent drag on a positive growth rate, rather than generating an on-going contraction,” JP Morgan said.
JP Morgan also acknowledges that a myriad of uncertainties exist around the future of the relationship between the UK and the EU.
“In our minds, however, It is useful to lay out a base case as to how we think things will play out from here. It highly unlikely events will align exactly to this script,” Barr said.
You can follow Martin Keatings at his webpage MartinKeatings.com
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