Finance Secretary comments on currency union

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Commenting on reports that the UK Government will support a currency union with Scotland post-independence Scotland’s Finance Secretary John Swinney said:

“We welcome this acceptance by the UK Government that it will be in the best interests of both the Scottish and UK economies for an independent Scotland to continue to use Sterling, as part of a formal monetary union.

“That is why we established the Fiscal Commission Working Group whose comprehensive report earlier this month set out detailed proposals for a currency union, including the merits of a shared central bank, and putting in place a fiscal sustainability agreement for both governments.  This proposal would ensure deficits do not diverge significantly as part of a formal monetary union, but will also ensure an independent Scottish government has the full fiscal and economic freedom to vary tax and spending to deliver economic growth and to serve the best interests of the Scottish economy.

“Scotland is in a stronger fiscal position than the UK, with the latest available figures showing that Scotland had a relative surplus of £2.7 billion, a surplus which under this kind of arrangement could be used to reduce borrowing, invest in the economy or a mix of both.  In fact  between 1980/81 and 2010/11, Scotland is estimated to have run an average net fiscal surplus equivalent to 0.5% of GDP, whilst the UK ran an average annual fiscal deficit of 3.1% of GDP.

“With the strength of North Sea Oil and gas – underlined by recent record levels of investment – and Scotland’s exports from this industry contributing £40bn to the strength of the pound it is no surprise the UK Government appear to have recognised that a currency union with Scotland is beneficial to the UK as well as to Scotland.”