John McLaren: So then, where do we go from here?

However... this should calm down and a new, if fragile, equilibrium emerge.

An emergency and draconian UK Budget seems unlikely, but this decision will depend in part on the markets reaction and how this could affect economic prospects. My guess is that there won’t be one (why spook the markets further?) but instead a wait-and-see approach, especially if a Brexiteer emerges as the new Prime Minister. However, at some point a new Spending Review will be needed which will have to address the areas where the EU is heavily involved in funding, which includes agriculture and regional development. There may also be, initially at least, some extra money as a result off leaving the EU which can be redistributed or used to cut taxes.

With regards to Scotland and a further referendum on independence, the position has changed from 2014 for at least two reasons.

First, North Sea oil revenues have fallen to, effectively, zero. Second, the idea that Scotland would retain sterling within the EU, while the UK moved outside the EU, seems like a difficult sell, which means either joining the unloved euro or setting up an untested currency of its own.

Neither of these shifts in the economic and fiscal fundamentals is likely to lead to a stronger Yes vote. In terms of the Scottish economy, the UK is still, by far, our biggest trading market and, as with the EU, we loosen these ties at our peril. In terms of finances, Scotland would no longer have access to the £7-£8 billion of oil revenues that the SNP-led Scottish Government assumed would become available at the time of the last independence referendum. This would lead to a very awkward period of budget adjustment, at least in the short to medium term.

Having said that, economic warnings from “experts” no longer seem to gain much traction with the electorate so it may well be that such apparent disadvantages are outweighed by concerns with being outside the EU.

• Professor John McLaren, Political Economist, scottishtrends.co.uk