Pound sinks as Scottish independence race tightens

LONDON -- Britain's main political leaders scrambled Monday to offer Scotland greater autonomy in a last-minute bid to stave off independence, as the pound sank on opinion polls suggesting separatists are gaining ground -- and may even be in the lead.

A "yes" vote in next week's referendum would end Scotland's 307-year-old union with England and plunge Britain into uncharted constitutional and economic waters.

Many British politicians and business leaders have long considered that outcome unlikely, and for months polls have put the anti-independence side ahead. But the gap has narrowed ahead of the Sept. 18 vote and one survey released Sunday by pollster YouGov gave pro-independence forces a narrow lead.

YouGov's methodology -- which samples a pool of online respondents who are paid to participate -- is not trusted by all poll-watchers, and other surveys gave the advantage to the "no" side. But the sense that the race is too close to call rattled independence opponents, and energized supporters.

"I don't think there's any doubt at all the momentum is with the ‘yes' campaign," said Scotland's pro-independence deputy first minister Nicola Sturgeon.

"Increasing numbers of people are concluding the best way to protect the health service, create jobs and ensure we never get Tory governments we don't vote for is to vote ‘yes.'"

The leader of the anti-independence "Better Together" campaign denied his forces were panicking.

"I'm very confident we will win the day," said Alistair Darling, a former British Treasury chief.

But the sudden move to offer greater powers to Scotland suggests the ‘no' campaign is far from confident.

Scotland joined England and Wales to make Great Britain in 1707. Now with a population of 5.3 million -- one-tenth of England's -- Scotland already has considerable autonomy, with its own parliament and separate legal and educational systems.

Britain's Conservative, Labour and Liberal Democrat parties -- all of whom oppose independence -- are preparing to offer Scotland even more financial independence, including greater tax-raising powers, in a bid to avert a ‘yes' vote.

Many Scots favor that option -- known as maximum devolution, or "devo max" -- but it is not on the referendum ballot, which asks whether Scotland should become an independent country.

Former prime minister Gordon Brown was expected to lay out some of the proposals Monday, arguing that "the status quo is not now on the ballot paper."

He planned to say that Scots faced a choice "between a stronger Scottish Parliament and an irreversible no-going-back separatism," the Labour Party said.

Supporters of independence accuse the No side of running a negative campaign that overstates the risks of independence.

The "Yes Scotland" campaign argues that an independent Scotland would be a prosperous country whose oil revenue would underpin a cozy social safety net. The approach has won over many Scots opposed to the budget-slashing policies of Conservative Prime Minister David Cameron's London government.

Polls suggest rising support for independence among Labour voters and from women, who have generally been more skeptical than men of the Yes side.

The latest poll results jolted financial markets, which for months seemed to take a sanguine view of the referendum. At one stage Monday, the pound had fallen 1.4 percent to $1.6104, its lowest level since November. It later clawed back some ground but was still nearly 2 cents down on the day.

Shares in Scottish-based financial institutions such as the Royal Bank of Scotland, Lloyds Banking Group and Standard Life also sagged, falling by between 1 and 2 percent.

Analysts said with 10 days to go, markets were waking up to the uncertainties of independence, which include Scotland's status in the European Union, its share of Britain's national debt, its stake in North Sea oil revenue and its currency.

Pro-independence leaders say an independent Scotland would continue to use the pound, but the British government says it won't agree to that.

Brenda Kelly, chief market strategist at IG Group, said the markets were "beginning to price in what was deemed unthinkable" -- the breakup of Britain.

"One thing is certain, if we get this sort of volatility on the prospect of a Yes vote, can you imagine the reaction if we do get a Yes vote?" said analyst Michael Hewson of CMC Markets U.K. "It's not likely to be pretty."