Savvas Savouri: How markets would treat a Labour-SNP coalition

Moreover, were the SNP to appear kindred spirits with Labour in Westminster, Labour defectors to the SNP could well return, particularly if a newly nationalist Scottish Labour Party had splintered from the Parliamentary party.

In short, were Labour and the SNP to be tied, their knot could quite possibly slip within 12 months.

In terms of equities, a more-expansive fiscal stance would lift sentiment towards firms with a gearing towards the UK public sector.

Were the base rate and gilt yields to rise earlier and by more than were the political status quo to continue, this would negatively impact sectors deemed to be interest-rate sensitive; more of a drag on the sentiment towards homebuilders than their earnings, which will be lifted by increasing new-homes sales and rising prices underwritten by demographics.

Many of these themes will play out across the FTSE 250, the FTSE 100 continuing to be influenced by investor sentiment towards China.

On the issue of UK banks, the underlying factor will be Britain’s economic growth and in particular the strength in residential and commercial-property markets, both of which which have impressive outlooks, regardless of any political change.

There may be readers surprised that while suggesting that a minority Labour Government would trigger a marked move in monetary metrics — notably sterling and interest rates — I am suggesting little in the way of a material change in the performance of the UK economy.

My reasoning is that from our automotive engineering and higher education across to our business service sectors, the positive perception of Britain across the emerging world will not greatly alter.

As for how the UK will be perceived from the vantage point of continental Europe I hardly imagine it will compare unfavourably with worsening political, social and economic developments there.

So what of London in all this? From the perspective of the emerging world, London is seen as a city state, a sort of Hong Kong or Singapore, but larger.

And if there are those who do chose to evacuate London in the event of a change in Government, they will find themselves caught in a busy revolving door; numbers entering greater than those departing. The reality is that London, indeed Britain widely, will continue to draw both human and financial capital, regardless of who occupies No. 10, because we remain unrivalled as a secondary hub.

Do not imagine that as economic powers are decentralised to the Scottish Parliament and Welsh Assembly, London’s legislators will not demand comparability.

For as powers are devolved in all directions from Westminster, the shortest distance they will travel is eastwards along the Thames to City Hall and the London Assembly.

I have no doubt that the fiscal devolution genie released by the SNP will result in differentiated taxes widely across Britain, with, for instance, different VAT rates on positional goods and services, from hotel rooms to cinema tickets and restaurant meals. Even local income tax looms and should be viewed favourably.

As for mainland Europe, I am in no doubt economic fortunes across it will worsen, and as they do, drag nation after nation into political travails which make events across Britain appear calm by comparison.

And for this reason, I would expect the pound to strengthen over coming years against the euro, even while it might weaken against the dollar.

Savvas Savouri is a partner at Toscafund