The U.K. economy is ready for battle. With the fastest growth among Group of Seven nations, Britain may have built up enough momentum to weather the possible loss of Scotland in today’s referendum, or to keep strengthening if the union survives. The economy has expanded for six straight quarters, payrolls are at a record high and authorities have forced the biggest banks to build capital reserves to steel themselves against shocks.
The U.K. has come a long way since 2007, when record debt and unfocused bank oversight sowed the seeds of the financial crisis. Bank of England Governor Mark Carney is keeping interest rates at a record low amid weak wage growth to ensure the recovery is beyond doubt, and can also maintain that policy stance for longer if uncertainty after a “yes” vote weighs on the economy.
“There’s a fair bit of resilience, you only have to look at how well the economy’s performed all through last year and the start of this year while our biggest trading partner, Europe, was in recession,” said Azad Zangana, an economist at Schroder Investment Management Ltd. in London. A split probably wouldn’t mean a major impact, “but there would still be a noticeable hit to business and consumer confidence.”