19th September 2014
After the campaign for Scottish independence was defeated the next step is the devolution of more power to Scotland, and the impact is expected to be minimal.
SNP first minister Alex Salmond was quick to remind Westminster of its promise to give Scotland greater power over taxes, spending and benefits in return for a ‘no’ vote.
The victory of the ‘Better Together’ campaign, which took 55% of the votes, is just one step in a journey of reforms to the UK constitution.
As Salmond conceded defeat he warned the unionist parties must stand by their promises to give more power to the Scottish parliament.
‘Scotland will expect these to be honoured in rapid course,’ he said, adding that he would ‘work constructively in the interests of Scotland and the rest of the UK’.
Fidelity Worldwide Investment head of European equities Paras Anand said: ‘The first point to acknowledge is that whiles yesterday’s vote represented a focal point, in truth it is better considered as a stop along a journey where the direction of travel had already been long established.
‘In many ways, the eventual success of the unionist campaign can be credited to a reframing of the ‘no’ vote as a vote for home rule, underlining the fact that, with the emotion stripped away, the two sides of the argument had always been much closer than either would have cared to admit.’
Anand said that the focus of independence could quickly turn to the impact increased devolution will have for the UK as a whole and ‘we could find that the mood surrounding the outcome of the vote may be short-lived as the focus turns quickly to the potential details and consequences of ‘devo max’’.
Schroders European economist Azad Zangana did not believe devolution max would have as large an impact on the UK.
‘Westminster is now expected to devolve more power to Scotland after a late promise by the leaders of the major Westminster parties,’ he said. ‘Variability in tax rates may introduce distortions at a micro level, but should have little impact to the overall macro-economy. The result along with further devolution should mean that another referendum is very unlikely in the foreseeable future.
‘However, long-term investors will be minded of the risk of separation and may demand a premium for undertaking fixed asset investments in Scotland going forward.’
The Scottish referendum also means the likelihood of a UK exit from the European Union is less likely.
‘Continuation of the union also means the risk of UK exit from the European Union has been reduced, although does remain significant,’ said Zangana. ‘Scottish residents are more in favour of remaining in the EU, compared to the rest of the UK where the majority favour an exit. Overall, major disruption has been avoided and focus can now return to building on the strong economic recovery in progress.’