Scotland votes No – but what next for the union?

Following Scotland’s vote against independence this morning industry experts react to the impact not just for Scotland but for the whole of the United Kingdom as the Prime minister pledges more devolved powers for England, Northern Ireland and Wales.

The No campaign sealed a win after the number of pro-union votes pushed past Yes votes to reach 55 per cent versus 45 per cent following the announcement of the final count from Fife council at 06:11 am BST.

Prime Minister David Cameron made a lengthy statement this morning recommitting to begin work immediately on additional powers for Scotland while also arguing that England, Wales and Northern Ireland should now be able to vote on their own tax, spending and welfare.

Cameron added a white paper on Scotland’s additional powers would be published in November with plans to draft laws by January 2015. Glasgow 2014 Commonwealth Games chairman Lord Smith of Kelvin will lead the process of further devolution.

Royal Bank of Scotland issued a statement this morning saying that following a No vote business would continue “as usual” at the bank.

Edinburgh-based life company Standard Life also issued its own statement saying it will now consider any implications of the constitutional changes planned for Scotland and the rest of the UK.

It says: “We recognise that further constitutional change is very likely following the clear result of the referendum. We will consider the implications of any changes for our customers and other stakeholders in our business to ensure their interests are represented and protected. As a large company based in Scotland, Standard Life is ready to contribute to this process.”

Schroders European economist Azad Zangana believes the additional devolved powers in Scotland should not have a drastic impact on the performance of the wider UK economy. He says: “Westminster is now expected to devolve more power to Scotland after a late promise by the leaders of the major Westminster parties. 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.”

But Capital Economics senior UK economist Samuel Tombs cautions that these additional powers could have a negative impact on the UK economy.

“The UK economy still seems likely to be weighed down by further bouts of political uncertainty over the next couple of years. For a start, since a Scottish No vote was only achieved at the expense of all three major UK parties committing to the further devolution of powers to Scotland, other regions of the UK may now intensify their demands for more autonomy,” he says.

The Scottish economy could actually be set for a boost now that a No vote has prevailed, according to Tombs. He adds: “Scotland’s economy, which the regional PMIs show has consistently underperformed the rest of the UK over the last year, seems set for a period of outperformance as activity and investment that was postponed due to uncertainty about Scotland’s future is undertaken.”