Sterling and markets rally after Scotland votes No

The votes have been counted, the union is intact – and the markets are happy, says our UK expert.

Some had chalked it up to summer stillness, but as the pound and markets rallied this morning it surely seemed like the world had been watching, waiting, as Scotland decided the fate of not only its own country, but of Britain as a whole.

The FTSE 100 share index was up 0.6% at 6,861 in early trading, while the sterling rose 0.4% to 1.2743 euros and jumped nearly 0.8% to $1.6525 against the US dollar, before falling back slightly.

These might not seem significant numbers, but that was a two-year high for the pound against the euro, and a two-week high against the US dollar.

Stock markets in Asia were mostly higher, as was Wall Street.

Those businesses that had mooted leaving Scotland in the event of a Yes vote have also been speaking this morning; RBS confirmed it would stay put, the contingency plan no longer necessary, while Lloyds Banking Group issued a statement saying it was “proud of its strong Scottish heritage and remains committed to having a significant presence in Scotland.” Share prices in London opened higher, with RBS up more than 3% and Lloyds nearly 2% higher.

That Edinburgh itself – the financial centre north of the border – voted No also signals a desire for stability in the union from the business community.

Investors may also be more inclined to do business in the UK as the No vote not only means companies can focus on business performance rather than back office paperwork to prepare for a new regime. Analysts believe the result reduces the risk of the UK leaving the EU in a subsequent referendum buoyed by Scottish independence, again making it a more attractive investment destination.

Commenting on the outcome of the Scottish Referendum that Scotland will remain part of the United Kingdom,John Longworth, Director General of the British Chambers of commerce (BCC) said:

“Businesspeople all across the UK have long known that the referendum would be the start, rather than the end, of a process of change. Businesses will now expect Westminster and Holyrood to reach a devolution settlement that is clear, fair to both sides, and swiftly executed.

“Businesses want greater devolution of power to be accompanied by greater devolution of finance, so that Scotland, and the rest of the United Kingdom, take responsibility for their respective tax and spending decisions. English, Welsh and Northern Irish businesses and taxpayers should not be subsidising support or incentives for their Scottish counterparts – nor the other way around.

“Any devolution deal for Scotland should trigger a new debate on local autonomy in England, where businesspeople in many areas want more freedom from Westminster and more influences over how their taxes are spent. Local businesses deserve a say in how a new, less centralized UK is governed in future.

“We have been through a period of disruption. Creative disruption can be galvanizing to countries, just as it is to businesses. It is up to the leaders of our nations now to make sure this is the result. Our United Kingdom now has the opportunity to define a future direction that stimulates growth and prosperity as never before – and for us together to make our way in the world, firmly on our own two feet.”

Michael Adams
Michael  Adams
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