The primary effect of Scotland’s vote against independence will be a huge sigh of relief, both for businesses operating across the UK and for the country’s political establishment, says Adrian Rogstad, country risk analyst for IHS.
However, he believes the rejection of independence is only the beginning of a larger debate about the future of the UK’s political system. In their bid to prevent the Scots voting ‘Yes’, the main UK party leaders have together promised to make the devolved Scottish parliament permanent and increase its taxing and spending powers.
This has already been met with protests from politicians within the Conservative Party – the dominant party in the UK’s ruling coalition government – who are angry at the lack of consultation with the UK Parliament and the promises of more funding to Scotland, which already receives more government spending per head than all other parts of the UK.
Ultimately, the promises of more powers to Scotland could spark a process of federalisation in the UK, where Wales, Northern Ireland and England or English regions are given increased autonomy and fiscal powers.
“Looking at the near term implications for the UK economy as a whole, while a yes vote for independence would have been unlikely to completely derail the UK recovery given that it now looks well established, it could very well have put a serious dent into near-term growth prospects at least,” said Howard Archer, chief UK and European economist for HIS.
“The uncertainty – over what will happen with the currency and UK debt in particular – would likely have weighed down on business confidence and led to at least a near-term reining in of investment and, possibly, employment plans – particularly if there was also accompanying sustained financial market volatility and a substantial hit to the equity market.”
Kevin Legrand, head of pensions policy, Buck Consultants at Xerox, commented: “Although the ‘no’ vote means that independence is now off the agenda for Scotland, increased devolution will mean changes that affect workplace pension schemes and their sponsoring businesses.
“The crucial changes will be in respect of the new powers over the setting of tax rates, and possibly the devolution of greater spending control to Holyrood. Workplace pensions are closely tied to the tax system and any changes to that on both sides of the border will result in a growing divergence between the regimes on each side of the border.”
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