Scots spurn independence in historic vote, devolution battle begins

By Alistair Smout and Guy Faulconbridge EDINBURGH (Reuters) - Scotland spurned independence and saved a union dating back 300 years in a historic referendum but its defeated leader said it would hold London to last minute offers of more power that could radically reshape the United Kingdom. A vote for the union is a relief for millions of Britons including Prime Minister David Cameron, whose job was on the line, as well as allies across the world who were horrified at the prospect of the United Kingdom breaking up. Unionists cheered, kissed and drank wine and beer in Glasgow, Scotland's biggest city where secessionists were in a majority, while nationalist leader Alex Salmond conceded defeat on Friday and hours later told reporters he would resign. Opponents of independence won 55 percent of the vote while separatists won 45 percent with all 3.6 million votes - a record 85 percent turnout - counted. But leaders from across the United Kingdom said the union must change if it is to endure. Speaking in front of an image of a giant white on blue Scottish flag, Salmond combined a pledge to respect the result with a warning to British politicians in London that they must respect their hasty promises of more powers for Scotland. Scots would be "incandescent" if they saw London politicians dragging their feet on their promises, he said. "There are 1.6 million people who made a choice for independence," he told a news conference. "I think the 1.6 million people will speak and speak loud if there is a retreat from the commitments made." Salmond said he would not run again as leader of the Scottish National Party when his term ends in November and would resign as Scottish First Minister then too. "For me as leader my time is nearly over but for Scotland the campaign continues and the dream will never die," the 59-year-old Salmond told journalists in Edinburgh, the Scottish capital which supported the United Kingdom. Cameron said the question of Scottish independence had been settled for a generation, a goal for which Salmond has long worked with a mix of shrewd calculation and nationalist passion. "There can be no disputes, no re-runs, we have heard the settled will of the Scottish people," he said outside his official London residence in Downing Street. FEDERAL KINGDOM? The campaign for independence had electrified this country of 5.3 million but also divided the passions of friends and families from the remote Scottish islands of the Atlantic to the tough city estates of Glasgow. Queen Elizabeth, who is at her Scottish castle in Balmoral, issued a rare statement expressing confidence that Scots would be able to come together again after the deep divisions of the referendum campaign. She said: "Knowing the people of Scotland as I do, I have no doubt that Scots ... are able to express strongly-held opinions before coming together again in a spirit of mutual respect and support, to work constructively for the future of Scotland and indeed all parts of this country." The referendum result sent sterling up sharply against the dollar and the euro. British bonds and shares rose while major British companies with Scottish exposure welcomed the decision. Royal Bank of Scotland said it had scrapped plans to move its registered office to England. Opinion polls showing a surge in Scottish separatist support in the two weeks leading up to the Sept. 18 vote prompted a rushed British pledge to grant more powers to Scotland, a step that has angered some English lawmakers in Westminster. In an effort to deflate that anger, Cameron vowed to forge a new constitutional settlement that would grant Scotland the promised powers but also give greater control to England, Wales and Northern Ireland. "Just as Scotland will vote separately in the Scottish parliament on their issues of tax, spending and welfare, so too England, as well as Wales and Northern Ireland should be able to vote on these issues," Cameron said. "All this must take place, in tandem with and at the same pace as the settlement for Scotland," he added. Cast as a constitutional revolution, commentators said Cameron's pledge of more powers to the constituent parts of the United Kingdom was aimed at sedating 'the slumbering beast of English nationalism'. But several pointed to the difficulties of reaching quick consensus among lawmakers on the details of devolution. Matthew Ashton, a politics lecturer at Nottingham Trent University, said the outcome for Cameron was mixed. "On the one hand he can make claim to the title of 'the man who saved the union'. On the other, he'll now have to deliver on his extraordinary ambitious promises of a new constitutional settlement." The opposition Labour party, wary of losing out from devolution, said it supported it but wanted a wide public debate after a parliamentary election in 2015. "We want to go as fast as possible but be want to do it in a way that properly understands the way we need to change," Labour leader Ed Miliband told the BBC. UK PLC Seeking to tap into a cocktail of historical rivalry, opposing political tastes and a perception that London has mismanaged Scotland, nationalists said Scots, not London, should rule Scotland to build a wealthier and fairer country. Though the nationalists won Glasgow, they failed to live up to opinion polls before the vote which forecast that the United Kingdom's fate was balanced on a knife edge. "We have chosen unity over division, and positive change rather than needless separation,” Alistair Darling, head of the "Better Together" campaign. Unionists had warned independence would diminish the United Kingdom's standing in the world and sow financial, economic and political uncertainty during months of negotiations over a messy divorce. U.S. President Barack Obama and European Union leaders had made clear they wanted the United Kingdom to stay together. In Brussels, the European Commission said the Scottish vote result was good for a "united, open and stronger Europe" while NATO Secretary General Anders Fogh Rasmussen welcomed the news. Belgian EU Trade Commissioner Karel De Gucht, whose native Flanders region is in thrall to a growing nationalist movement, said a Scottish split would have been "cataclysmic" for Europe, triggering a domino effect across the continent. While Scottish leaders promised to work together, Scots remained divided in joy and disappointment over the fate of their country. "Absolutely amazing," said unionist campaigner Stephen Stanners. "They shouted the loudest, so it made it seem like a majority. But we’re obviously the silent dignified majority. And we pushed it through. And it just shows that Scotland loves the UK and the UK loves Scotland." But Calum Martin, a 21 year-old history student at Edinburgh University who voted for independence said the question of secession would return. "It’s a disappointing result but it sets the stage for going forward," Martin said. "As long as there are flaws, there will be calls for independence. You can’t put the genie back in the bottle once it’s out." (Additional reporting by Andrew Osborn, Kate Holton, William Schomberg and David Milliken in London. Writing by Guy Faulconbridge and Stephen Addison. Editing by Mike Peacock and Philippa Fletcher)