Scotland's “no” vote on independence was met Friday with a sense of relief among money managers and markets.
Markets in the U.K. and Europe rose on the news. The FTSE 100 index coming close to its Dec. 30, 1999, peak of 6,930.20. The gauge added 18.63 points, or 0.3%, to close at 6,837.92, after earlier climbing as much as 0.8%. The Stoxx Europe 600 index gained 0.2% to close at 348.52 at, after earlier rallying as much as 0.9%. Volume in both gauges' stocks was more than double their 30-day averages, according to data compiled by Bloomberg.
The pound fell slightly (down 0.57%) vs. the dollar to 1.6302, and strengthened slightly (up 0.1%) vs. the euro to 1.2702, from 1.2689.
The vote “removes a potential 'curveball' for financial markets, and will hopefully now allow much of the uncertainty to ebb away. Details about the extent of any new devolved powers need to be thrashed out, of course, but the short-term rally in sterling, and other U.K. assets suggests a modicum of relief,” said Neil Williams, group chief economist at Hermes Investment Management, in a statement. Hermes is owned by the £40 billion ($65 billion) BT Pension Scheme, London, the largest pension fund in the U.K.
“The campaigning is over, and investors will welcome a reduction in the uncertainty of recent months,” said Martin Gilbert, CEO of Aberdeen, Scotland-based Aberdeen Asset Management, in a statement.
“Both sides of the debate need to come together so that from today, Scotland moves forward united. Scotland has long been a world leader in business sectors such as oil and gas, whisky and investment, and the task now is to grow the rest of the economy with the strong support of politicians of all parties,” Mr. Gilbert said.
Some polls cited pension provisions as a key reason for the “no” vote.
Lucy Grubb, spokeswoman at the National Association of Pension Funds, said “at this stage it is a wee bit too early” to conjecture whether the loss of the U.K.'s Pension Protection Fund safety net might have had an effect on the vote.
Joanne Segars, NAPF CEO, said in a statement: “This brings to a close a period of intense speculation and debate, much of which has focused on the issue of pensions. But while the referendum (is over), the changes and challenges facing pension funds are still very much here.”
A spokeswoman for the £16 billion Pension Protection Fund, London, said in an e-mail: “Given the ongoing debate during the referendum period and the result, we stand ready to work with the U.K. and Scottish governments on how the current pensions regime may change if there is further devolution. We will continue to protect 11 million people across the U.K., paying compensation (and collecting levies) until any changes to the PPF legislative regime are made.”
Pension benefit concerns even extended to young people. One 17-year-old told her parents she was voting 'no' because she was worried about her pension.
Among the financial services firms in Scotland that had threatened to move to England in the case of a “yes” vote was the Royal Bank of Scotland and its £25.7 billion Group Pension Fund, Edinburgh.
“The announcement we made about moving our registered head office to England was part of a contingency plan to ensure certainty and stability for our customers, staff and shareholders should there be a 'yes' vote,” an RBS spokesman said in an e-mail. “That contingency plan is no longer required. Following the result, it is business as usual for all our customers across the U.K. and RBS.”
Amy Fisher, spokeswoman at Edinburgh-based Martin Currie Ltd., said the firm could not provide any comment at this time. Officials at Edinburgh-based Baillie Gifford could not be reached by press time.
Data Editor Timothy Pollard and Bloomberg contributed to this story.
