Capital worth billions flowing out of UK as Scots get set to vote, says report

Investors pulled $27 billion out of UK financial assets last month - the biggest capital outflow since the Lehman crisis in 2008 - as concern mounted about the economic and financial consequences if Scotland left the UK, a report showed on Friday. People in Scotland will vote in a referendum on independence on Sept 18, and the decision is on a knife edge after the pro-independence campaign overcame a 20-point deficit in the polls since the start of August. The most recent ICM/Gaurdian poll released on Friday put the gap at just 51 percent intending to vote “No” to 49 percent in favour of “Yes”.

Sterling outflows have been an issue since the end of June, but they really gathered pace in August and now look like intensifying again with the possibility of Scottish independence coming to the front of investors’ minds.

Michael Howell, the managing director of CrossBorder Capital, which compiles the index

Data compiled by London-based consultancy CrossBorder Capital said financial outflows from the UK totalled $27 billion in August, compared with inflows of $8.8 billion the same month last year. That’s the biggest monthly outflow since the white heat of the financial crisis in 2008, when giant U.S. bank Lehman Brothers went bust. It exceeded the selling of UK assets seen around the 2010 general election, when an inconclusive result led to several days of uncertainty.

The sterling index has effectively collapsed and the UK is second only to Japan in terms of financial market outflows.

Michael Howell

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