City Watch: Turbulent times lie ahead if Scotland vote ‘Yes’, says Brian Tora

Brian Tora of J M Finn & Co

Brian Tora of J M Finn & Co - Credit: Archant

Shares seem to have run out of steam a little recently and, in a way, this is hardly surprising.

Not only do we have continuing uncertainty in the Middle East and Ukraine, but this week Scotland goes to the polls to vote on independence.

Until the referendum is behind us, it is difficult to make sense of what to do in our domestic markets. The uncertainty generated by the recent narrowing of the gap in the opinion polls will act as a drag on sentiment, but in the event of a “Yes” vote, expect even more turbulent times.

Indeed, it is fair to say the union is unlikely to be the same again, even if Scotland remains part of the UK. Already Scotland has been offered greater autonomy, so a growing divide between how it conducts itself compared with the rest of the UK seems inevitable. At least retaining the union will mean that those companies that have threatened to relocate their head offices to England can put such plans on hold.

If shares are likely to become even more unsettled if Scotland votes for independence, the pound is likely to be in for an even more torrid time. With the currency issue overshadowing recent debates, it is hard to see how sterling can do anything other than take a hit – good news for exporters, tough if you’re off on holiday.


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So for this week at least investors should be casting their eyes north of the border and hoping for a decision from the Scottish people to remain in the UK. If they do choose to opt out, then the uncertainty will stick around for some time. Undoubtedly opportunities will be thrown up as a result, but it may not feel too comfortable.

Brian Tora is an associate with investment managers, JM Finn & Co.

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