The SNP government in Scotland has been very clear on two things: 1) that it would not hold a second Scottish independence referendum unless there was a material change in the relationship between the UK and Scotland, and 2) that a vote for the UK to leave the European Union, against the majority will of the Scottish people, would constitute such a material change.

Scottish First Minister Nicola Sturgeon said in the wake of the Brexit vote: “It is… a statement of the obvious that a second referendum must be on the table, and it is on the table.” But how likely is it?

Our market shot up from 18% (more-or-less in line with the probability of a Brexit vote) to around 70% once the surprise result of the Brexit vote came in. But the market has been heading back lower ever since, which runs a little against the popular perception.

There are a number of factors at play here, I think. The most obvious is linked to the UK’s invocation of Article 50. One could argue that there is no material change in Scotland’s relationship with the UK until Article 50 has been invoked. If this doesn’t happen this year, then neither will a formal Scottish independence referendum announcement.

There is also some doubt around whether or not Sturgeon would call a second independence referendum at all if she doubts her ability to win. This time around she would almost certainly have to concede that independence would mean either a new Scottish currency, using the pound with no control over or access to the Bank of England or joining the euro. Also, with oil prices around $50, projections for the Scottish finances would be far weaker than they were in 2014.

Add to this the experience of Quebec which held two independence referendums in 1980 and 1995. Two defeats, it is commonly believed, killed the independence movement. The Scottish independence movement was very far from killed off by its 2014 referendum defeat. Some question whether it could survive a second. The stakes appear very high indeed and Sturgeon’s position more nuanced than widely imagined.

Then of course we have the opposition to Scotland’s EU membership from all those countries, like Spain, who have regions looking to break away themselves. For all the welcome Sturgeon received in Brussels recently, negotiations would be far from easy if and when they began in earnest.

Make your forecast on the almanis market now: Will the Scottish executive announce a second independence referendum before the end of 2016?


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