Scotland says ‘no’.

Yesterday Scotland voted no to independence by a 10.6% margin, higher than predicted by any of the various polls. The final result saw 55.3% voting ‘no’ and 44.7% ‘yes’.

The immediate upshot was that the pound rose to a two-year high against the euro and a two-week high against the US dollar. The pound also rose 0.8% to $1.6525 against the US dollar, before falling back somewhat.

Over the previous couple of weeks the pound had fallen because of fears that Scotland might vote for independence, creating an obvious risk to the currency markets that would have led to a big sell off. With the ‘no’ vote, the markets can now go back to focusing on the fundamentals of the UK economy.

The markets also opened higher, with the FTSE 100 share index by 10.00hrs rising 0.78% to 6,872.

The ‘no’ vote also saw RBS confirm straight away that it would not now be moving its registered head office, despite the contingency plans put in place to relocate to London in the case of a ‘yes’ vote. Lloyds Banking Group also announced that it would be maintaining a significant presence in Scotland. The share prices of both opened higher, with RBS up more than 4% and Lloyds Banking Group up almost 2.5%.

Standard Life also confirmed that it would not now be relocating any of its operations to England.

The good news for investors is that the likelihood of a period of uncertainty for 18 months, whilst the two sides negotiated hard on independence terms, has been averted. And whilst discussions over the possible increasing ‘federalisation’ of the UK may have some impact on consumer sentiment and business confidence, in general terms the markets can now focus on the UK economy, which is still doing pretty well.

This week, the Office for National Statistics (ONS) reported that the unemployment rate fell to 6.2% over the three months to the end of July, its lowest level since 2008.The number of jobless fell by 146,000 to 2.02 million over the three months.  

The ONS also reported that the annual rate of UK inflation fell in August. The Consumer Price Index (CPI) moved to 1.5% from 1.6%, whilst the Retail Price Index (RPI) also fell to 2.4% from 2.5%.

The upshot is that the Bank of England is under little pressure to raise interest rates in order to keep CPI inflation at or below its target rate of 2%. However, the ‘no’ vote probably means that the recovery will continue apace, so the markets are predicting the first increase in the Bank Rate by next spring.

On the more general front, the ‘no’ vote means that there will be no immediate change to ISAs or other financial and investment policies, so for the time being at least it is very much business as usual.

So if you had been holding off from making changes to your investments pending the outcome of this vote, now might be the time to discuss your plans with your Kellands financial adviser.

< back to News & Views

News & Views

May 23, 2024

How could stealth taxes affect your wealth in 2024?

In the past four years, many aspects of your financial life may have changed.
Read more