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Woodford: Scottish vote will spark period of ‘extraordinary uncertainty’

Dan Jones
Written By:
Dan Jones

This week’s referendum on Scottish independence will herald a period of ‘extraordinary political and economic uncertainty’ for the UK whatever the outcome, Neil Woodford has said.

With the vote increasingly looking too close to call, Woodford (pictured) said a fracturing of the UK’s entire political landscape “is now probable” as the repercussions of either a ‘yes’ or ‘no’ vote on Thursday hit home.

From an economic point of view, the manager of the Woodford Equity Income fund said the political changes will only accelerate and prolong a UK economic slowdown he believes has already begun.

Woodford said a ‘yes’ vote will also increase the likelihood of the remainder of the UK exiting the European Union.

“I am of the view that the UK has already crossed a constitutional Rubicon regardless of which way the vote goes on Thursday. The economic and political implications of this are profound and will, I believe, become more tangible in the immediate aftermath of the vote,” Woodford said.

“I believe that it is now probable that we are about to witness the fragmentation of governance within the United Kingdom – effectively, the federalisation of the UK regardless of who wins on Thursday.”

Those ramifications also include the calling of another UK general election following the conclusion of independence negotiations or, in the event of a ‘no’ vote, discussions over the increased devolutionary powers now promised to Scotland.

With those discussions likely to take until 2016 to conclude, the UK faces the prospect of two general elections in two years – unless the winners of the 2015 election opt to continue governing without, in Woodford’s words, a legitimate mandate.

The manager, who holds SSE but few other companies associated with Scotland, said he has yet to make any changes to his portfolio based on the impact of independence, but remains concerned over the long-term impact.

“So far, we have not seen anything significant enough to alter an investment case or prompt any changes to the portfolio,” he said.

“We do, however, feel it is prudent to start preparing our investors for a period of extraordinary economic and political uncertainty here in the UK.”