By Alastair Macdonald
LONDON (Reuters) - If Scots vote now on independence, their 307-year-old union with England will continue - nine polls since December show the No vote winning their referendum by anywhere from 8 to 28 percentage points.
The trouble for investors in Britain, and anyone taking a view on whether the United Kingdom survives, is they don't vote for another seven months and many Scots say they may change their mind by September 18. That has drawn significant betting on a Yes vote and may well upset so far sanguine financial markets.
"I think anyone would be pretty foolish to predict with any certainty at this stage," said Edinburgh pollster Mark Diffley, even though his firm, Ipsos, has always found a solid majority saying they would vote No. Most recently, in December, fully 63 percent of those giving Ipsos an opinion opposed independence.
An average of nine polls since early December shows the Yes vote losing the referendum by 20 points, a score of 60-40. The numbers have shown little change over the past two years.
Yet over a third admit to some uncertainty on how they will cast a ballot whose historic and uncertain consequences divide Scots in ways that show little clear pattern, cutting across party loyalties and lines of gender, class, age and geography.
That undecided "middle million" among four million voters gives First Minister Alex Salmond hope he can persuade more compatriots to back independence - just 120,000 more Yes votes might suffice if the gap is really only 8 points.
Surveys show economic arguments will be key and he faces an uphill struggle. Salmond's anger at challenges from London and Brussels to his pledges to retain sterling and EU membership underlines his need to reassure on the economy.
Yet supporters of the union credit the Scottish National Party (SNP) leader with a demonic grasp of tactics and fret he can turn early dominance by the No campaign against them to win over faint hearts daunted by a fiscal leap in the dark.
Salmond needs to win over people like Lesley Murphy from Edinburgh, who would like to be "brave enough to vote Yes" but is "wavering towards No" on concern about jobs for her children and her own British pension; and Steven Knott from Aberdeen, who is fine with the status quo but could "definitely be persuaded" to vote Yes - if he heard a good argument for it.
Bookmakers see a real possibility of independence, even if most give Salmond at best a one-in-five, or 20-percent, chance.
Online betting exchange Betfair reports odds of 4-1 against Scotland voting for independence, odds that have been stable despite pollsters detecting a slight recent trend toward Yes.
Nate Silver, who called every U.S. state right in 2012 and has popularized ideas of betting markets as predictors of voting, caused a stir in Scotland last year by saying that, on the polling evidence he saw, the Yes had "almost no chance".
Yet 4-1 outsiders, like President Harry Truman in 1948, can beat the odds and turn hot favorites into history's footnotes.
Leighton Vaughan Williams, an economics professor who researches betting and political forecasting at Nottingham Business School, says betting markets are deep enough to be taken seriously but probably over-estimate Salmond's chances.
Historic data shows outsiders attract more bets than they merit: "My best estimate is that there is about a 1-in-7 chance of a Yes outcome," he said. "This does not mean there is a vanishingly small probability. It means what it says - that if you roll a die, the chance of a Yes is somewhere near to the chance of throwing a six. Unlikely, but worth a roll."
Sterling and government bonds would probably suffer in the short term from a Yes vote that would bring a period haggling over the pound, public debt, North Sea oil and other UK assets.
"As the Scottish referendum draws closer, we think that the risk premium for sterling will go up," said Chris Turner, head of foreign exchange strategy at ING in London.
Longer term, economists generally believe, the remaining 92 percent of the British economy would shrug off Scotland's exit.
Most polls show 15-20 percent of people saying they "don't know" how or whether they will vote. But a quarter of those who express an intention say they "might" change their mind.
Particularly volatile appear to be young voters - including 16- and 17-year-olds being given an unprecedented say.
Also wavering between Yes and No are some of the third or more of voters who say the ideal would be more power devolved to Scots within the union. Most plan to vote No, but some polls suggest that might change if more devolution seems unlikely.
"The key risk in this is the number of don't knows," said Diffley, noting Ipsos has found growing numbers on both sides now saying they might switch: "People are beginning to think about it a bit more," he said. "And perhaps challenge their preconceived idea of which way they are going to vote."
Alan Renwick of Reading University uses historical data to argue that the No vote should, if anything, increase through the campaign. Past exceptions, for example where opting for Yes became a "protest vote" against a ruling establishment, do not seem to apply; the SNP has governed Scotland for seven years.
Renwick highlighted, however, one mechanism that could buck the trend for the No vote to grow - if Yes campaigners persuade voters the status quo is not an option, perhaps that Scotland's place in the European Union, or social services, are at risk.
Noting English support for the anti-EU UK Independence Party ahead of May's European election, he said: "If there were a big vote for UKIP, that would make it easy to argue that here are the English going off on some weird, isolationist, right-wing wander ... That would be the argument that would seem to me to be the most interesting over the next few months."
HEAD OR HEART
For John Curtice, one of Britain's leading polling experts and a close observer of the referendum from his chair at Strathclyde University, perceptions of the economic pros and cons are key since they can tip the balance for the majority torn by a dual identity, of feeling both Scottish and British.
Polls find close correlation between voting intention and views on the economic effects of independence. One major survey found a substantial majority would back independence if they thought it would make them 500 pounds ($835) a year better off.
"People with those dual identities ... are looking for a way of breaking the tie," Curtice said. Economics will "have the greatest ability to change people's minds".
But noting that polls have never consistently shown a majority for independence, he added that the SNP was "having to create something here that has never previously existed".
"And time's beginning to run out."
Economics aside, some analysts believe the SNP can tap nationalist passions in a country imbued with a sense of its history and irked by the role of junior partner in the union.
"Deeper and possibly irrational passions" are needed to argue for independence in a globalised economy, one says. Some cite Quebec's narrow rejection of independence from Canada in 1995 as evidence for how nationalist sentiment can surge before such a ballot. And many say Salmond has chosen his timing well.
British Prime Minister David Cameron vaunts Scotland's role in British sporting success, notably the 2012 London Olympics. But if "Team GB" has had a couple of years in the sun, the summer of 2014, as Salmond knows, will be blanketed in tartan.
Glasgow will host the Commonwealth Games, where, unlike the Olympics, Scotland fields its own teams. And festivities will mark the 700th anniversary of the Battle of Bannockburn - an against-the-odds victory over English invaders that preserved Scotland as a separate state until it sought the union of 1707.
A surge in nationalism could dent a No campaign reliant on appeals to humdrum economic anxieties. "The question is," Arno van der Zwet of the London School of Economics wrote in a blog, "Will such a bubble be enough to shift the debate from the head to the heart and persuade the closet nationalists?"
Tax consultant Steven Knott, 32, sees "a bit of both" head and heart in play. What disappoints him is how much debate has focused on narrow policies, rather than how such constitutional upheaval might reduce poverty or spread wealth around regions, and how political leaders entrench themselves in rival camps:
"We have a very black and white debate but it's a very nuanced issue with a lot of shades of grey ... I'm mainly in the No camp. But if the arguments were there I would vote Yes."
For retired maths teacher Lesley Murphy, 62, this is the toughest vote she's ever cast, one she sees as vital for the future of younger generations. Her ideal might be "maximum devolution" within the union, but that is not on offer.
She feels more Scottish than British, believes Scots are more socialist than neighbors "down south" and has "absolutely no doubt" Scotland has the money and brains to govern itself.
"But lots of things are so merged together and it's really difficult to know what will happen if a split takes place.
"My heart says absolutely and definitely Yes. But being a fairly intelligent person I'm weighing up the pros and cons."
(Additional reporting by Anirban Nag and Tricia Wright; Editing by Giles Elgood)