Scottish secession from the United Kingdom has for many investors always been the second big risk to Britain from Brexit. The next few months may test that thesis.

After more than four years of wrangling with Brussels before Brexit was sealed in January, and 12 months of a pandemic, some gauges of UK economic uncertainty fell last month to their lowest since before the 2016 referendum on EU membership.

Sterling too returned to levels not seen since then.

And after years of avoiding British stocks and bonds in global portfolios, investors appear to be viewing the reality rather than the uncertainties of Brexit amid hopes for a vaccinefuelled rebound from COVID19.

Thats driven domestically facing UK stocks back to early 2020 highs, and speculators are long of pounds again at a level not seen for three years.

But the state of the union is likely to be back in focus after Scotland heads to the polls on May 6 for regional parliamentary elections.

Investment firms, including Credit Suisse on Thursday, cite another referendum on independence as a key tail risk for the UK banks at least, if not the wider economy.

If the governing Scottish National Party is returned with a hefty majority as expected, it has pledged to seek another vote on secession to match the one it lost narrowly 5545 in September 2014 and it cites Scotlands popular opposition to Brexit as the premise for a rerun.

It needs the assent of the UK parliament in Westminster to do so and ruling Conservatives…