The Scots don't owe the markets a no vote

The markets may have an opinion on Scottish independence — but the No campaign has been acting like that matters more than anything else. Capital markets should follow the will of the people, not lead it.

  • By Andrew Griffin
  • 09 Sep 2014
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After the weekend polls put the Scottish independence campaign ahead, there has been much self-flagellation among those campaigning to save the union. They had expected to win — and still do — and worry that the weekend's polls show they had been confident and complacent.

But an important and overlooked part of the argument is how much it has relied on practical considerations and smitten with the status quo. Instead of defining what the union would look like in its future incarnations, the campaign has relied on appeals to financial markets, to asset valuations, to the market's allocation of capital.

Arguments led by the capital markets are bad twice over. They are rhetorically bad because they are boring to the population at large. Bankers and opinion writers would like to think that the people of Scotland care if the chairman of HSBC, Douglas Flint, warns that Scottish independence risks capital flight away from the country, but they do not.

More importantly, these are ethically bad arguments. Capital markets should not decide the people's will. They are, at best, a pragmatic factor among many. The owners of agricultural banks in revolutionary France were presumably worried about the effect of the republic's farming policy; that doesn't mean that the country should not have overthrown its nobility. Tea stocks were exposed to unusual amounts of volatility in 1773, but it's difficult to imagine that argument placating the Sons of Liberty.

The independence referendum comes at a time that could have been useful in defining modern Britain, whose woolly constitution often puts off grander questions about what kind of a country its people would like it to be.

But instead of discussing this, the argument has been reduced to one about capital flights and asset prices. The value of assets and the financing of enterprise is central to every capitalist state, as market participants well know. But to use those to demand the continued existence of the union is back to front. States decide; capital markets follow. 

Of course, if a Scottish sovereign does come into existence, its ability to issue debt will be central to its essence and the life of its citizens. Sovereign debt and the spending of governments and monarchs have been central to many of the greatest revolutions of history, and must be central too in the reconstitution of new states. If a Scottish government is unable to look after its people because it cannot fund itself, grandiloquent questions about its own meaning are irrelevant.

But the importance of that issue is directly proportionate to the tastelessness of using it as a fillip for a no vote. Nobody really doubts that Scotland will be able to issue sovereign debt as an independent country — the only real barriers to doing so would be the potential for spiteful and restrictive measures from the remainder of the UK. Presenting the Scottish people's choice as one of independence or food is inauthentic and ignoble.

The Scottish referendum should be a contest of ideas, comparing union to federation to independence. Like all ideas, these cannot exist in a vacuum — pragmatic considerations inform and illuminate them. But in placing those practicalities before a grander sense of what the country means, the No campaign has let down both sides.

  • By Andrew Griffin
  • 09 Sep 2014

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 13 Mar 2017
1 JPMorgan 94,925.33 384 8.39%
2 Citi 87,531.58 331 7.74%
3 Bank of America Merrill Lynch 84,341.49 288 7.46%
4 Barclays 75,288.19 241 6.66%
5 Goldman Sachs 68,504.71 208 6.06%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 14 Mar 2017
1 Bank of America Merrill Lynch 10,650.87 23 11.13%
2 Deutsche Bank 8,169.49 17 8.53%
3 HSBC 6,243.46 23 6.52%
4 Citi 4,355.35 13 4.55%
5 SG Corporate & Investment Banking 4,273.37 17 4.46%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 21 Mar 2017
1 JPMorgan 5,440.56 17 10.74%
2 Deutsche Bank 4,468.97 23 8.82%
3 UBS 3,742.72 17 7.39%
4 Citi 3,393.89 23 6.70%
5 Goldman Sachs 3,360.93 18 6.63%