JP Morgan '˜expecting Scottish independence and new currency'

AMERICAN bank JP Morgan has confirmed that it expects Scotland to vote Yes in a second independence referendum as well as introducing its own currency before the UK leaves the European Union in 2019.

By The Newsroom Wednesday, 29th June 2016, 2:21 pm Updated Wednesday, 29th June 2016, 3:23 pm

US bank JP Morgan is expecting Scottish independence and a new Scottish currency. Picture: Getty Images

Bank economist Malcolm Barr said in a note to clients: “Our base case is that Scotland will vote for independence and institute a new currency at that point (2019).”

Mr Barr said that the ‘pressure to hold a new referendum’ would arise following the UK’s Brexit.

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Mr Barr said that he and his colleagues were expecting a second referendum on Scottish independence to be held some time before 2019, when the UK would formally leave the EU.

And economists at the bank are preparing for Scotland to establish its own currency, rather than continuing to use the pound.

The Wall Street bank anticipates that David Cameron’s successor will likely trigger Article 50 later this year, setting in motion the two-year period of negotiations required for the UK to exit the bloc.

Mr Barr added that the two options available to the UK would be a ‘Norway-style’ agreement, allowing free movement and budget contributions to the EU in exchange for access to the single market, or an arrangement with more diminished access to the single market.

Mr Barr said: “At this point in time, the latter appears more likely. We expect there to be clear evidence of multinational operations shifting the location of their activity out of the UK given the regulatory uncertainties.

“Even if the UK begins to signal that it will compromise on other priorities in order to secure full access to the single market in financial services, there is a clear risk that euro-denominated activities relocate to within the EU simply to ensure continuity of relationships.”