What the Scottish No vote means for your finances

by Steve Phillips, Independent Financial Adviser

So the Scottish referendum didn’t result in an independent Scotland; and the dust is still settling after the victory of the No campaign.  The emphasis now will be on ensuring that the whole of Scotland works together so that all political parties and communities benefit from still being within the United Kingdom.

But what about the financial perspective?

In Edinburgh, the main financial centre of Scotland, the vote was, interestingly, a clear No.  Perhaps the lingering question mark over currency was at the forefront of minds – or the uncertainty over EU membership and how that would impact an independent Scotland’s ability to trade internationally.  Perhaps the lack of clarity as to how an independent Scotland would regulate its financial services had a bearing.

Perhaps even more revealing were the business and financial announcements in the final few days before the vote – that supermarket prices might increase; and most notably that RBS - the Royal Bank of Scotland itself - would decamp to south of the border in the event of a Yes vote. 

What’s clear is this: no-one in the financial world likes uncertainty.  Investment companies plan their products and make their money on being able to make reasonable predictions about the future.  When they can’t, they have no choice but to err on the side of caution and protect their profits for the sake of their shareholders – or take short investment decisions to reduce risk, as the markets have seen recently. 

Where there’s uncertainty it usually leads to a change in the financial products available on the market, with some products being withdrawn, and new products being offered at higher premiums - and that’s not good news for consumers.

It’s now clear that there won’t be a mass exodus of major institutions from Scotland, so there is at least stability in employment, communities, earnings and the cost of living north of the border, and indeed the promise of more investment.  The institutions are proclaiming ‘business as usual’ – and somewhat with a tone of relief. 

Those who had deferred financial decisions awaiting the outcome of the vote can now go ahead with confidence, knowing that the financial framework is unaltered.  

The UK and international markets rallied on news of the vote’s outcome – and we need to remember that for many of us our future wealth depends on the markets’ performance.  Those who have made the decision to save for their future with a pension fund need stability and growth in the markets to ensure they see a good return on their investment for their future.

The result of the referendum settles the question of independence for a generation.  With the uncertainty now over for the foreseeable future, it’s an opportune time to make the most of the financial health benefits that economic stability can offer us all.