There has been a substantial increase in the probability of a Yes vote in the referendum. This conclusion is based on bookmakers’ odds over the last week. Over this period the probability of a No vote has dropped from 85% to 75% (and that of a Yes increased from 15% to 25%), the most rapid decline seen since Mr Osborne made his infamous currency announcement in February 2014. The decline is probably associated with the latest televised referendum debate in which Mr Salmond is thought to have won a decisive victory. Figure 1 tracks the probability of a No vote as implied by the odds on both No and Yes being offered by 23 bookmakers on a daily basis.
Figure 1: Probability of a No vote based on bookmakers odds from October 2013 to 3 September 2014
Can this momentum be maintained over the remaining days of the campaign? The decline in the probability of a No outcome is sharper than occurred during March and April, but a No outcome is still more likely now than was being predicted by the bookmakers during that period.
Some who have already bet at long odds on Yes may “cash out” their bets, taking advantage of the shortening odds. This would weaken the momentum towards a further decrease in the No probability.
We shall continue to monitor the odds and report the outcomes as they emerge.