Currency Union backed by pro-Union Calman Commission academic

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By a Newsnet reporter

An academic who helped set up the pro-Union Calman Commission after the SNP’s 2007 Scottish election win, has backed the Scottish Government’s plans for a currency agreement between a newly independent Scotland and the remainder of the UK.

Professor Anton Muscatelli has backed the Scottish Government’s position in the event of a Yes vote, by agreeing that sharing Sterling makes sense for both Scotland and the rest of the UK.

Appearing in front of the Scottish Parliament’s Economy, Energy and Tourism Committee, Professor Muscatelli said:

“I strongly support the view of the Fiscal Commission Working Group that a monetary union – a Sterling currency union – between the rest of the UK and Scotland would be optimal for both sides immediately following independence.”

Countering claims that a currency Union could see similar problems to those that hit the eurozone, Professor Muscatelli added: “With only two parties in the Sterling union, enforcement should be much more straightforward than in the eurozone with its complex governance structure,”

The endorsement of the Scottish Government’s stance from the academic who was closely associated with the Calman Commission, set up by the three pro-Union parties in their first attempt to satisfy demands for more powers for Holyrood, has been welcomed by the SNP.

SNP MSP Marco Biagi, who sits on the Committee, welcomed the contribution as “common sense”.

The MSP said: “As Professor Muscatelli sets out – a currency union is the sensible option for Scotland and for the rest of the UK, a position demonstrated by the Fiscal Commission and re-enforced by this evidence.”

Joining Professor Muscatelli was Jeremy Peat, of the David Hume Institute and former Group Chief Economist at RBS, who said:

“My preference in principle, without doubt, is the currency union.”

Mr Peat added that he was “disappointed” at the UK government’s refusal to enter into discussions with the Scottish Government on a Sterling Area, saying:

“I would’ve like to see the professionals sitting down with open minds and seeing exactly what could be achieved. How could one potentially move to a situation where a currency union could work in the interests of both parties…I think the first place this discussion should take place is the Bank of England on a technical basis. When you go beyond that the government needs to be involved.”

Mr Biagi added: “An overwhelming majority of people north and south of the border agree that sharing the pound post-independence makes sense. A recent poll showed 71% of people in the rest of the UK want to share the pound with an independent Scotland, while the Social Attitudes Survey showing that 79% of people in Scotland back it.

“After a Yes vote, the bluff and bluster will be put to one side and the Scottish and UK Governments will negotiate a currency union in the mutual interests of both countries – ensuring certainty for business and in the best interests of the people.”