If Scotland goes, then Britain too?

As Scotland nears its independence referendum, bankers worry about the consequences of an exit of Britain from the European Union

Tremors over a possible breakup of the United Kingdom have been felt here in recent days, as markets gyrate and banks make contingency plans. Yet as Scotland nears its vote on whether to be an independent nation, bankers here worry that a split might unintentionally set in motion a push for what could be a much uglier divorce: an exit of Britain from the European Union.

"There's a sense of, 'If it could happen in Scotland, it could happen in the UK', " said Chris Cummings, chief executive of TheCityUK, a lobbying group for the financial sector.

If an independent Scotland would be complicated, a Britain alone in Europe would be a complete mess, financial executives say.

"Certainly the more important of the two is the potential of Britain leaving the EU," said Brian Hilliard, the chief British economist at Societe Generale in London.

Britain, for many businesses, particularly financial services, is a gateway to the rest of the 28-nation European Union, a market of 500 million people, more than the US and Japan combined. For businesses like Citigroup or Goldman Sachs, having a London office means having a passport for nearly all of Europe. Without that unfettered access, the free flow of capital, talent and goods and services would have to be renegotiated.

"It is hard to be the gateway to the EU if you are not in the EU," Cummings said.

A diminished gateway status would hurt the financial industry, which accounts for 7 per cent of Britain's gross domestic product and nearly 4 percent of jobs. Finance attracts more foreign direct investment than any other sector, and Britain attracts more foreign direct investment than any other member of the European Union, according to TheCityUK.

Bankers worry that without the promise of all of Europe behind it, London - rivalled only by New York as the world's leading financial centre - would not attract the same interest, and neither would Britain.

"This is the worst possible time for Britain to consider leaving the EU or for Scotland to break with the UK," wrote George Soros, the billionaire financier, in The Financial Times on Thursday.

The calculus behind how Scottish independence could drive an exit by Britain from the European Union - known as Brexit - is political.

Prime Minister David Cameron, responding to calls from the right, including members of his own party, to get out of the European Union has agreed to hold a referendum in 2017 on Britain's membership in the union.

Voters in Scotland have been more supportive of the European Union than those in the rest of Britain, meaning an independent Scotland removes a significant bloc of pro-Europe votes in a referendum.

Nigel Farage, the head of the UK Independence Party, or UKIP, has made the strongest case for leaving the European Union. He contends that Britain has sacrificed its independence to European bureaucrats who have let in a flood of immigrants and stolen the reins of power. Beyond UKIP, there is a sense that Britain has lost its sway.

©2014 The New York Times News Service