UK stock markets took a beating together with GBP this morning. The move was led by the banking shares, with the likes of RBS, Barclays and Lloyds showing hefty declines with some of them trading more than 30% in the red. The cyclical banking shares are the first to react in major turning points. If uncertainty increases the banks are the first to suffer but moves that take over 30% off the share prices seem exaggerated even though there is an adjustment period ahead.
One of the open questions is now what happens with the pro-EU Scotland. Now that the UK decided to leave the EU the Scottish independence is back on the table as all 32 local authority areas voted in favour of Remain with 62% of the vote versus 38% for Leave. Scotland’s First Minister Sturgeon said that the EU vote “makes clear that the people of Scotland see their future as part of the European Union.” There will also be voices in Northern Ireland and Wales for the euro option, particularly in the case of the former should Brexit lead to the installation of a full border between the north and south.
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