Morgan Stanley sees 15% chance of Scottish independence from UK

Morgan Stanley analysts said on Wednesday there was a 15% chance that Scotland will leave the United Kingdom, as Britain holds regional and local elections next week with Scotland's dominant Scottish National Party hoping for a mandate for independence. Scottish voters narrowly rejected independence in a referendum in 2014.

Morgan Stanley analysts said on Wednesday there was a 15% chance that Scotland will leave the United Kingdom, as Britain holds regional and local elections next week with Scotland's dominant Scottish National Party hoping for a mandate for independence.

Scottish voters narrowly rejected independence in a referendum in 2014. The SNP, which has run the Scottish government within the United Kingdom since 2007, is hoping next week's election delivers support for a new referendum. The Greens, who also support independence, are also expected to pick up seats in Scotland's Holyrood parliament. "With the pro-independence parties likely to secure a majority in the May 6 Holyrood election, we see a 15% chance of independence," investment bank Morgan Stanley said in a research note to clients. It said there was a 30% chance that a new referendum would be held.

Any plans for a new vote on the future of the union could usher in another volatile period for British assets, after more than four years of squabble with Brussels over the terms of Britain's exit from the EU. Opinion polls in Scotland point to a persistent, though narrowing, majority in favor of leaving the 300-year-old United Kingdom. Scottish voters opposed Britain's exit from the EU, and some blame London for bringing them out of the bloc against their will.

Given the time it would take to stage a new referendum and negotiate separation, Morgan Stanley said the earliest plausible date for independence would be Jan. 1, 2025. On Tuesday, Credit Suisse said an SNP majority would materially increase the chances of a second Scottish independence referendum in the next 12-24 months.

"In this scenario, UK assets would need to start pricing in a political risk premium for a potential break-up of the UK," the Swiss investment bank told its clients.

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