Alexander unable to provide cost of currency threat to rUK businesses

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  By a Newsnet reporter
 
UK Treasury Chief Danny Alexander has admitted he doesn’t know how much businesses in the rest of the UK will be forced to pay if a Westminster Government follows through with its threat to refuse a currency union with an independent Scotland.
 
The Lib Dem MP was appearing in front of Holyrood’s Economy, Energy and Tourism Committee where he was asked to set out the detailed figures behind any analysis the Westminster Government had done on the costs to UK businesses of rejecting a shared currency area.

However, despite the issue having dominated the news on both sides of the border, Mr Alexander was unable to provide any figures, and when pressed further could only agree to write to the committee to provide them in the future.  The MP also failed to reveal whether the Westminster coalition would set out an offer of further powers for Scotland in advance of the referendum.

Responding to questions on the impact on rUK businesses, Mr Alexander claimed that the UK Treasury had factored in costs to businesses across the rest of the UK before ruling out a currency union with an independent Scotland.  The Lib Dem MP also claimed that affects on the UK’s balance of trade deficit of the loss of oil and gas had also been calculated.

“There would be benefits to the rest of the UK in keeping transaction costs low,” he told the committee, but claimed a currency union would also create “significant economic risks.”  However asked what the cost would be to the rest of the UK of no currency union the Lib Dem MP said:

“There are transaction costs that would come from having a separate currency, those would be many millions of pounds for businesses in England and businesses in Scotland.”

Pressed to provide the official calculations, Mr Alexander could not give an answer and promised to send them in writing to the committee.

Mr Alexander was also asked to respond to comments from Scottish Conservative leader Ruth Davidson who suggested last week that there would be no joint announcement on further powers to Scotland, prior to the referendum.

SNP MSP Marco Biagi asked if it was now UK coalition policy that there would be no further powers to Scotland in the event of a No vote.

Responding, the UK Minister drew attention to the announcement yesterday of a new power over bond issue and said it “should be taken as a token” that there is “scope” for more powers.  The Lib Dem MP said his party would work as hard as it could in order to try to “influence” Labour and the Conservatives.

Pressed if there would be a cross party announcement on further powers for Scotland before the referendum, Mr Alexander responded cryptically: “If the coalition was going to make an announcement in a few months time, I wouldn’t announce it here”.

The session also heard the Lib Dem MP deny there were plans to scrap the Barnett formula, something that Chancellor George Osborne has signalled may be on the horizon when public finances stabilise.

However, in a surprise admission Mr Alexander appeared to suggest there may be even more cuts beyond those already announced by the coalition, saying there was a “Lot of work to still to do before public finances are fully stabilised”.

Commenting, SNP MSP Mike MacKenzie said:

“Danny Alexander’s lack of answers on more powers and on his Government’s analysis was extremely disappointing and has left people in Scotland with more questions than answers.

“His lack of clarity has simply added to the confusion and disarray engulfing the anti-independence camp over the substantial additional powers that people want for Scotland.

“Given the substantial analysis underpinning the case for a shared currency area that has been set out by the Fiscal Commission Working Group, the least that Mr Alexander should have expected today was to be asked about what detailed analysis the Westminster Government had done on the costs to the rest of the UK.

“Danny Alexander claimed that the Westminster Government had conducted a detailed analysis on the substantial costs of rejecting a shared currency area, but was unable to set out any kind of detailed figures.

“That is extremely disappointing and I sincerely hope that his letter to the committee will be more forthcoming.

“It is simply not credible for the anti-independence parties to have taken the stance they have on currency without expecting to have to justify their claims.

“The simple fact is that a shared currency is the best option for Scotland and the best option for the rest of the UK – a fact that the Fiscal Commission Working Group which includes two Nobel laureates made abundantly clear in their comprehensive analysis.”