Scottish independence: Investors turn on Scotland as ‘tartan panic’ grips the City

A total of seven of the Footsie’s top 10 fallers were down as a result of the referendum fears

UK government has offered more powers to Scotland if it rejects independence (Getty)

“Tartan panic” gripped the City today as traders dumped blue-chips exposed to Scotland after the Yes campaign took a surprise lead for the first time – just 10 days ahead of the referendum.

With less than two weeks to go until the historic 18 September vote, the slender 51-49 lead for the pro-separatists - the first of the campaign - hammered FTSE 100 companies deemed most at risk from a vote for independence north of the border.

A total of seven of the Footsie’s top 10 fallers were down as a result of the referendum fears, wiping more than £1.5 billion off the value of the blue-chip benchmark. The biggest victims were the two taxpayer-backed banks, Royal Bank of Scotland and Lloyds Banking Group (owner of Bank of Scotland), which saw around £750 million slashed from their share price.

IG analyst Chris Beauchamp called the sell-off a “tartan panic”.

He said: “One poll lead doesn’t make an election but it has come as a bit of a shock. Previously markets were sailing along in the confident expectation that nothing was going to happen, but not now. Some of our clients have been trimming their positions. There are 10 days of turmoil ahead.”

Insurer Standard Life and energy firm SSE — based in Edinburgh and Perth respectively — were also swept up in the sell-off. BAE Systems, which has more than 3000 staff north of the border, Glasgow-headquartered engineer Weir and fund manager Aberdeen Asset Management were also dumped.

Daniel Sugarman, an analyst at ETX Capital, said: “The sharp drop provides further indication of market recognition of the potential difficulties faced by Scottish-based financial heavy-hitters should independence be implemented.”

The share fall came as the pound slumped 1 per cent against the dollar to a 10-month low of $1.6145 and also lost ground against the euro.

CMC Markets analyst Michael Hewson warned: “It will matter a great deal to Scotland if (Scottish first minister Alex) Salmond gets this one wrong, because unlike the euro he won’t be able to change his mind, and Scotland and the rest of the UK will be stuck with the consequences for years to come.

“The stakes for next week’s vote just got a whole lot bigger and this morning’s market reaction would appear to reflect that.”

Economists said the turmoil triggered by a “Yes” vote was also likely to stay the hand of the Bank of England’s monetary policy committee on interest-rate rises.

Deutsche Bank economist George Buckley said: “The implications of a ‘Yes’ vote for the financial markets are huge — as sterling’s move overnight has shown — and BoE rate hikes could yet be delayed on account of the uncertainty which a ‘Yes’ vote would almost certainly produce.”