Weekly Report

The Scotland says “no” to independence, hence the 307-year-old union remains intact. This is good news for the UK economy as heavy consequences of a Scottish exit have been avoided, at least in the immediate future. This said, the yes-no gap has been tighter with only 55% of voters supporting David Cameron’s “no” campaign. A nonnegligible 45% wanted independence despite unanswered questions: independent Scotland’s economic viability, a potential new currency (as the BoE clearly positioned against an EZ-like monetary union), the custody of health services and other social spending, the partition of North Sea oil revenue. As the “no” victory has been narrow, the risk of another Scottish referendum should persevere in the next few years and reduce the upside potential of the Sterling in the longer run.

In the immediate future however, the UK and the EU take a breather as the Scottish presence in the UK clearly moderates the risks of a national resurgence walking into 2015 General Election. In the aftermath of th e Scots referendum, the fears of a potential rise of Conservatives (Tories) decline meaningfully. Although a conservative win implies the holding in 2017 of a referendum on EU membership, traditionally more pro-European Scots should continue balancing the fallouts.