TIME Scotland

Scottish Independence Could Put Whisky Makers on the Rocks, Study Says

Daily Life On Orkney
Dave Reid inspects the quality of the heather filled peat, from Hobbister Moor, in Highland Park whisky distillery on May 30, 2014 in Kirkwall, Scotland. Jeremy Sutton-Hibbert—Getty Images

A vote for Scottish independence could expose local distilleries to costly and unpredictable swings in foreign exchange rates, a new report warns

A new study suggests a Scottish vote in favor of independence could boomerang on one of the nation’s proudest exports: Scotch whisky.

Analysts from Bank of America Merrill Lynch say that Scotland’s upcoming vote for independence on September 18th risks severing the nation from the British pound, forcing it to create its own currency and casting it into a brave new world of fluctuating exchange rates. Whisky makers, in particular, could absorb the brunt of the shocks. They account for the nation’s second largest export and ship to roughly 200 countries around the world, according to the report.

“At present, the large producers typically invoice Scotch whisky in U.S. dollars,” the authors wrote. “As such the main transactional FX risk faced is the movement in Sterling/US$ which is typically hedged on a 12 month basis. A volatile currency would likely be more difficult and expensive to hedge making pricing and planning decisions harder. “

That would mean a possible contraction of investment, fewer barrels of Scotch and a slightly less satisfied global population of Scotch drinkers.

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