Although most Brexit proponents figured that the last remaining hurdle to triggering EU exit negotiations would be the House of Lords, a new threat has emerged that could delay UK Prime Minister Theresa May’s plans. There are reports emerging that the leadership of Scotland is contemplating holding another referendum to remain a part of the United Kingdom, potentially damaging the Government’s goal of a smoother negotiation path with the European Union next month. Should Scotland be able to hold a referendum and decide to leave the UK, it could throw the EU exit plans into tumult.
Besides triggering a constitutional crisis, a Scottish exit could also pave the way for the country to independently negotiate with the European Union for membership, although even this type of strategy has complications associated with such a move. As a result of the more uncertain path forward, the Pound has already reacted negatively, with GBPUSD falling towards just shy of 1.2400 considering the Scottish independence move could reduce some of the UK’s leverage during negotiations. Should a referendum be held, it could prove disastrous for the Pound, sinking it back towards the lows reached last fall.
A New Wrinkle Faces the UK Exit
The UK is facing an uphill battle with the date for triggering Article 50 rapidly on the approach. Increasingly onerous demands from the European Parliament and constituent nations insisting that the UK honor its existing financial commitments, combined with necessary approval from the House of Lords are still hurdles that need to be cleared. Now however, the possibility of Scotland holding a referendum on UK membership may further complicate the status of negotiations. The last time that Scotland held a referendum on membership back in 2014, the Scots voted by 55.00% to 45.0 0% to remain a part of the UK.
However, tunes have changed, and Scots are now showing renewed interest in independence following the decision by the government to seek a “hard brexit†that would see the UK lose access to the single market mechanism. Scotland, for all its efforts, is on the receiving end of mixed messages from the European leadership. While some European officials say it should not be an issue to admit the country of Scotland to the Union, others have taken a less conciliatory tone and insist on arduous conditions for any future member. Although the Scottish National Party has made no such formal moves yet, if a referendum is called, May could try and postpone such efforts until after triggering Article 50.
