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MitonOptimal Weekly Comment - Week 38, 2014Although the question of Scottish independence has now been put to bed for a good while – I’m not sure even Alex Salmond would have the brass neck to try again – the political landscape within the UK is set to go through significant change as the result of the referendum process.

In the meantime, the financial markets have welcomed yesterday’s outcome by bidding up the Pound and UK stock market, which, at the time of writing, is enjoying its best day for more than a month.

Whether the promise of greater devolved powers for the Scottish Parliament, announced by former PM Gordon Brown just nine days ahead of the vote, was a panicked response to the sharp rise in the “Yes” campaign’s opinion poll ratings or a pre-planned masterstroke by the “Better Together” leadership may never be officially acknowledged (but I think we all know the answer to that one, right kids?). Moreover, rather like many of Mr Salmond’s “plans” for a separate Scotland, the details of exactly what those additional powers will turn out to be are, as yet unclear. Chief among them, however, will be something resembling full fiscal autonomy and extensive control over welfare. What is clear, is the timetable for these measures to be put in place: a detailed framework is required by November and draft of the new “Scotland Act” published by 25th January (Burn’s Night) next year.

As economists and analysts go about the task of assessing the likely tax consequences of fiscal independence for individuals, households and corporations alike (might this be a case of “careful what you wish for”?), others are contemplating the wider implications of yesterday’s vote.

Among the likely consequences is the further strengthening of the UK Independence Party’s position within the political firmament, at the expense of all three current main parties. Its leader, Nigel Farage’s calls for greater devolved powers for England (should Scottish MPs in Westminster still be able to vote on issues affecting England?) look to be attracting growing support and with a UK general election just seven months away, the timing could hardly be better.

As vexillologists bemoan a lost opportunity and cry into their beer (Isn’t Google just the best thing ever?), spare also a thought for London Mayor Boris Johnson, whose chances of becoming the next Prime Minister would have been boosted immeasurably by a successful “yes” campaign, since the loss of one of the colonies would have left David Cameron with no other choice than to fall on his sword.







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