Apocalypse postponed

Whether this financial Armageddon would really have come to pass, and whether or not painting this doomsday scenario moved a critical mass of voters, we shall now never know.

The result was decisive, and in consequence Friday was a day of unstinting euphoria rather than mad panic on financial markets. The FTSE 100 rose 116.69 points, or 1.7%, to 7,003.64, with shares in banks and energy companies seeing big gains, the pound was up nearly two cents against the US dollar at $1.5438. The gilt market rose (with 10 year gilts yielding 1.84%, a decline in yield of 0.10%) a sign, analysts said, that markets were reassured of a continuation of Conservative plans to eliminate the rest of the budget deficit

Not surprisingly, given Ed Miliband's apparently unpersuasive promises or threats to intervene in the market on behalf of consumers and against corporate giants, certain sectors have been celebrating more than others. Bank shares saw some of the biggest gains, on hopes that the sector will not see any of Labour's threatened further rises in levies. Shares in Lloyds Banking Group rose 5.9% while Barclays was 4.1% higher.

Energy firms also their share prices rise, as Labour had scored what turned out to be illusory policy success by suggesting a price freeze and more powers for the energy regulator. British Gas owner Centrica rose 7.9% and Perth-based SSE's shares were up 4.7%.

"The election outcome was clearly an unambiguously good result for markets in short-term, especially bearing in mind the forecasts of some political commentators and the polls" said Callum D'Ath in the Edinburgh office of stockbrokers Brewin Dolphin. "The markets like the stability promised by a decisive result."

Colin Borland of the Federation of Small Business Scotland shared the sentiment, adding the rider that a clear Tory victory also brought in a raft of expectations that his members now want fulfilled:

"The fact that we have a clear winner means we are spared the threatened weeks of political wrangling.That means the new government can get straight on with delivering on the issues that matter most to Scotland's small businesses: ending the scandal of late payment; developing a more competitive banking market; and ensuring that big energy firms treat our members fairly."

How long will the sigh of relief from business and the markets be sustained? As the dust settles on one of the biggest double-upsets in British political history, involving the triumph of the SNP in Scotland and the damnation of both Labour and the Liberal Democrats south of the border, the markets are already finding new fears to factor in to their unresting calculations

"Initial short-term cheer could be followed by a medium-term downside chill" warned Fabrice Montagne, an economist at Barclays. This is a fancy way of saying that markets don't switch regularly between the ghost train and the house of fun are not really worthy of the name of markets. Alternating waves of fear and greed are what traders make money from, and what keeps the capitalist show on the road.

Chris Beauchamp, senior market analyst at IG Trading Group said "a night of victory for the Conservative party has put UK markets on the front foot, with sterling and the FTSE moving higher." "For investors, the results... mean that they can cease worrying about the UK economy, and focus on the other areas of concern, like Greece and whether the Fed will hike rates this year."

The most obvious worries for UK-watchers are the threat of twin referendums, and the possibility of "Brexit" and - to coin a word - "Scoxit".

The SNP may like to present a prospective poll on EU as a manifestation of a sinister xenophobic conspiracy of English nationalists, while a possible re-run of the Scottish independence will be a flower-strewn carnival of popular democracy. The truth is however that the markets make no such distinction, apart from noting that the former is more pressing, and indeed is likely to emerge next this week as the biggest issue in British politics.

To those assessing Britain's future prospects, to the business mainstream, both of these threatened in-out polls represent a serious threat to the status quo and loom large as potential disruptors of commerce. Whatever politicians may play down the disruption, talking about record investment in defiance of the alleged threat, there are plenty of analysts who see both referenda as serious impediments to future investment in Scotland and the UK.

Much of the anxious comment in the aftermath of the SNP's stunning sweep of Scotland was from observers unfamiliar with politics in this country, who are not appraised of Nicola Sturgeon's pledge that the election was "not about another referendum" or perhaps were appraised of it but did not quite believe it, on the grounds that a Scottish National Party that is soft on independence is a contradiction in terms. Observers closer to home will know that the Scottish Government will not deem that the people of Scotland are asking for a further referendum until they, the Scottish Government, believe that the vote will go their way. Nothing has happened to the all-important economic case for independence since September 2014, to make that date seem imminent.

Alasdair Humphery, lead director, of commercial property giants Jones Lang LaSalle (JLL) in Scotland clearly believes that markets are fretting about Indyref: The Sequel. He takes issue with the assertion of the Scottish Government and its supporters in groups like Business for Scotland, that potential investors are unmoved by the prospect of Scotland going it alone, ranking it ahead of the EU vote as a market concern:

"Only six months after the [Scottish] referendum result, question marks remain over the constitutional future of Scotland. Whilst the SNP have been clear that this was not a vote about independence, it's difficult to see how a second referendum isn't closer than it was when this election campaign began. And of course, uncertainty over the future of the Union will once again create some hesitation over investing in Scotland, especially from UK-based investors, albeit they might be attracted by softer pricing in the Scottish property market."

"This uncertainty is further compounded by the looming spectre of a planned referendum on British membership of the EU in 2017. Scottish businesses will remain committed to a strong position within the European Union and will need to engage in the reform debate to see if a referendum can be avoided.

"To avoid a repeat of the slowdown in investment and occupier activity which characterised the run-in to last year's referendum, Scotland's business and political community will need to focus on reassuring the market of Scotland's excellent credentials as a place to do business and to invest in. Edinburgh and Glasgow are generating positive interest on the back of a variety of strong key markets such as the service sector, banking and finance, digital technology and bio sciences."

For all the pre-election rhetoric about not working with the Tories, the irony is that Nicola Sturgeon and David Cameron are both fighting for the same thing: increased prosperity that spreads throughout the whole of these islands, and the continued membership of the UK within a reformed EU. Although their ultimate goals are widely different, both of them know that they can only be achieved by ensuring growth, jobs, and diversification in Scotland.

Markets will no doubt continue to go up and down like yoyos, but for once it seems that in terms of the economy at least, the aims of Westminster and Holyrood are aligned, not just with each other but with Scottish business in general. That is a result.

Time to deliver.

With the widespread expectation of a messy aftermath to the election, meant that even the Conservatives themselves did not expect to have to deliver on manifesto pledges that may have been intended as bargaining positions for intended negotiations rather than serious intentions. If so, their bluff has been called. As well as being forced to show their hand on the many unspecified £30bn in cuts that they will be required to find, the Tories will now be honour bound to deliver the following:

Taxes : The new Government is pledged to raise the personal allowance to £12,500, as well as upping the 40% tax threshold to £50,000, considerably higher than the current level of £42,386. The party has also promised not to raise VAT or National Insurance under their governance. Wealthier Scots would also benefit from an increase the inheritance tax threshold to £1 million for married couples or those in a civil partnership, a policy disapproved of by the Institute for Fiscal Studies, which has threatened that it will drive up house prices.

Housing market

A Tory victory means the Help To Buy ISAs will go ahead, meaning new buyers' deposit savings get a £50 top-up from the state for every £200 they save up to a maximum of £3,000. Help To Buy equity loans will be extended to 2020, while the mortgage guarantee scheme will be extended to 2017, helping both new buyers and "second steppers".

Pensions

The coalition government already introduced new retirement rules that gave people aged 55 and above more freedom to access their pension pots, allowing them to take the cash to spend or invest as they saw fit, a policy that a Labour-led government might have withdrawn. Like the other parties, the Tories have also promised a "triple lock" on pensions, meaning that the state pension will rise each year either by consumer price inflation, average earnings or 2.5%, whichever is higher and will be rolling back tax relief for those earning over £150,000 a year.