It’s been so quiet – I reckon one quarter of the European FX market is down at its chalet in Verbier for the Tour de France and another quarter was doing L’Etape du Tour this week – it was good to see a bit of action in the English pound/Scottish pound market. Normally this inactive cross trades at 1.00/1.05 – Scottish notes are always discounted because they are hard to use south of the border – but the offer moved out after the University of Glasgow published an analysis of Scotland’s GDP. What a shocker it was.
The country’s GDP plunged in the first quarter of 2009 by 2.4%, which the university points out is one of the largest-ever recorded quarterly falls. Although the decline is largely in line with the UK as a whole, Scottish GDP is now 5.2% lower than its peak level at Q2 2008.
This looks bleak, so I emailed Martin Shannon, senior media relations officer at the university, telling him not to panic. “I wouldn’t worry – those independent Scots will go cap in hand to the English for some more subsidies just like they always do,” I wrote.