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| Stock market rises but sterling stalls amid fallout from Scotland vote | Stock market rises but sterling stalls amid fallout from Scotland vote |
| (about 2 hours later) | |
| Companies with strong Scottish ties pulled the stock market higher on Friday but anxiety about the political implications of the referendum took the shine off sterling. | Companies with strong Scottish ties pulled the stock market higher on Friday but anxiety about the political implications of the referendum took the shine off sterling. |
| Royal Bank of Scotland ended 3% higher although the FTSE 100 closed up just 18 points - 0.3% - in a rise that was more muted than expected. | Royal Bank of Scotland ended 3% higher although the FTSE 100 closed up just 18 points - 0.3% - in a rise that was more muted than expected. |
| Sterling had touched a two-year high against the euro in Asian trading hours and was up half a cent against the dollar at $1.64 as the referendum result came in, but eventually ended down against the dollar. | |
| The rally was initially led by RBS and other companies with exposure to Scotland, including the rival bailed-out bank Lloyds Banking Group. Both banks had warned they would move their registered offices from Edinburgh in the event of a yes vote, while the insurer Standard Life had said it would set up English subsidiaries. | The rally was initially led by RBS and other companies with exposure to Scotland, including the rival bailed-out bank Lloyds Banking Group. Both banks had warned they would move their registered offices from Edinburgh in the event of a yes vote, while the insurer Standard Life had said it would set up English subsidiaries. |
| RBS made clear that its contingency plan was no longer required, saying it was "business as usual", although Lloyds and Standard Life were more equivocal in their remarks. Lloyds said it remained "fully focused on supporting households and businesses in Scotland as well as right across the UK", while Standard Life said it would "consider the implications" of the referendum, which is expected to lead to changes right across the UK. | RBS made clear that its contingency plan was no longer required, saying it was "business as usual", although Lloyds and Standard Life were more equivocal in their remarks. Lloyds said it remained "fully focused on supporting households and businesses in Scotland as well as right across the UK", while Standard Life said it would "consider the implications" of the referendum, which is expected to lead to changes right across the UK. |
| Lloyds is expected to return to the question of where to base its registered office when implementing the restructuring required by the rules requiring a "ringfence" to be erected between high street and investment banking activities by 2019. | Lloyds is expected to return to the question of where to base its registered office when implementing the restructuring required by the rules requiring a "ringfence" to be erected between high street and investment banking activities by 2019. |
| A relief rally had been expected after Scotland voted against independence, though analysts cautioned that political uncertainty remained after David Cameron, the prime minister, promised more devolution for the UK. | A relief rally had been expected after Scotland voted against independence, though analysts cautioned that political uncertainty remained after David Cameron, the prime minister, promised more devolution for the UK. |
| Guy Ellison, head of equities at Investec Wealth & Investment, said the initial relief had been "tempered by lack of clarity on the real consequences of further devolution of powers to all UK regions". | Guy Ellison, head of equities at Investec Wealth & Investment, said the initial relief had been "tempered by lack of clarity on the real consequences of further devolution of powers to all UK regions". |
| Howard Archer, chief European and UK economist at IHS Economics, said: "The UK economy, most businesses and the markets will likely all heave a huge sigh of relief that the Scots have rejected independence – and by a slightly larger margin than the recent polls had suggested. There would likely have been serious adverse near-term repercussions for the economy both south of the border and particularly in Scotland from a yes vote." | Howard Archer, chief European and UK economist at IHS Economics, said: "The UK economy, most businesses and the markets will likely all heave a huge sigh of relief that the Scots have rejected independence – and by a slightly larger margin than the recent polls had suggested. There would likely have been serious adverse near-term repercussions for the economy both south of the border and particularly in Scotland from a yes vote." |
| The governor of the Bank of England, Mark Carney, had flown back from the G20 meeting in Cairns, Australia, in time for the referendum result and was in Threadneedle Street in the early hours of the morning in case a contingency plan was needed if there had been a yes vote. In the event, the Bank did not make a formal statement once the outcome of the referendum was known. | The governor of the Bank of England, Mark Carney, had flown back from the G20 meeting in Cairns, Australia, in time for the referendum result and was in Threadneedle Street in the early hours of the morning in case a contingency plan was needed if there had been a yes vote. In the event, the Bank did not make a formal statement once the outcome of the referendum was known. |
| Archer said the no vote would also lead to expectations that the Bank would increase interest rates early next year. A yes vote would have delayed expectations for a rise in rates off the low of 0.5% – the level set since March 2009. | Archer said the no vote would also lead to expectations that the Bank would increase interest rates early next year. A yes vote would have delayed expectations for a rise in rates off the low of 0.5% – the level set since March 2009. |
| Bill O'Neill at UBS Wealth Management agreed. "The largest impact will be political. The impact on the UK economy will be minimal and it will maintain its current growth trajectory. The Bank of England will be more likely to raise interest rates as the recovery continues," O'Neill said. | Bill O'Neill at UBS Wealth Management agreed. "The largest impact will be political. The impact on the UK economy will be minimal and it will maintain its current growth trajectory. The Bank of England will be more likely to raise interest rates as the recovery continues," O'Neill said. |
| Many currency dealers had been at their desks overnight while the votes came in. David Bloom, head of foreign exchange strategy at HSBC, was one of them and said a key moment had been just before 11pm when pollster Peter Kellner, who runs YouGov, said it was 99% certain that it was a victory for no. "Sterling had nerves of steel through the night," he said, adding he expected little further headway. | Many currency dealers had been at their desks overnight while the votes came in. David Bloom, head of foreign exchange strategy at HSBC, was one of them and said a key moment had been just before 11pm when pollster Peter Kellner, who runs YouGov, said it was 99% certain that it was a victory for no. "Sterling had nerves of steel through the night," he said, adding he expected little further headway. |
| Bloom, along with his colleagues at HSBC, said: "Possible pressure to devolve powers to other regions in the UK means that, despite the result, the UK may never be the same again." | Bloom, along with his colleagues at HSBC, said: "Possible pressure to devolve powers to other regions in the UK means that, despite the result, the UK may never be the same again." |
| While sterling rallied, the HSBC analysts warned "the shine had already begun to come off". | While sterling rallied, the HSBC analysts warned "the shine had already begun to come off". |
| "Any disappointment on growth, or renewed focus on the large current account deficit, could still weigh on the currency," they said. | "Any disappointment on growth, or renewed focus on the large current account deficit, could still weigh on the currency," they said. |
| Business leaders called for politicians to rally behind the UK. John Cridland, director general of the employers' body, the CBI, said: "As the debate now moves to the question of further devolution, it is important that it does not undermine the strength of the single internal market and it is in the best interests of citizens living in England, Wales and Northern Ireland, as well as those in Scotland." | Business leaders called for politicians to rally behind the UK. John Cridland, director general of the employers' body, the CBI, said: "As the debate now moves to the question of further devolution, it is important that it does not undermine the strength of the single internal market and it is in the best interests of citizens living in England, Wales and Northern Ireland, as well as those in Scotland." |