Independent experts back SNP policy on keeping pound says MP


  By Martin Kelly
SNP Westminster Treasury spokesperson Stewart Hosie MP has said there is “overwhelming support for Scotland to keep the pound”.
Mr Hosie cited as evidenced, supportive comments from experts in politics, academia and the finance sector.

The SNP MP’s claim followed a visit to Scotland last week by UK Chancellor George Osborne who attacked plans for a post-independence Scotland to continue to use the pound.

Mr Osborne claimed there was no guarantee that the UK and Scotland would be able to come to an agreement on a currency union, despite widespread support for an independent Scotland to keep Sterling following a Yes vote in 2014.

The SNP rubbished Mr Osborne’s attack as political and not based on economic reality, a view backed by many respected figures in finance.

In a statement issued yesterday, Mr Hosie said:

“Alistair Darling said it himself at the beginning of the year, that if you have independence, a currency union is logical- a point which was neglected during a week of scaremongering from the No campaign.

“Unlike George Osborne – who is putting the whole resources of the Treasury behind the No campaign’s efforts to stop Scotland voting Yes – a whole host of credible figures are in favour of Scotland keeping the pound post-independence.

“Professor Alex Kemp from the University of Aberdeen has said during a House of Lords Evidence Session that Scotland keeping the pound would help the rest of the UK.

“David Blanchflower, a Professor of Economics and former member of the Monetary Policy Committee, has said the UK government’s comments are political more than economic, and ‘it’s certainly pretty likely, given how how disastrous George Osborne has been, that if Scotland had had their own fiscal policy, they would’ve done better’.

“These comments, amongst many others, are extremely welcome statements from eminent experts, which tell the truth about Scotland and the opportunities of independence.”
Speaking earlier this year, Labour MP Alistair Darling who heads the No campaign, admitted that an independent Scotland continuing to use the pound would be in the best interests of the remainder of the United Kingdom.

Speaking on Newsnight Scotland on 10th January 2013, Mr Darling said it was “desirable” and added: “If you have independence, or separation, of course a currency union is logical.”

Last week’s claims by Mr Osborne were seized on by pro-Union commentators with many, including BBC Scotland Business and Economy Editor Douglas Fraser, raising the spectre of the euro as a realistic option.

However no country can be forced to join the euro against its will and Dr. Daniel Kenealy, School of Social and Political Science, University of Edinburgh in a letter to the Scotsman on 13th December 2012 labelled such suggestions as “scaremongering”.

He wrote:

“The euro is a genuine example of scaremongering within this debate. The notion that Scotland could be compelled to join the Euro is simply untrue.” 

Claims that an independent Scotland would be forced to join the euro were undermined by UK Prime Minister David Cameron who, appearing on BBC News on 14th December 2012, said:

“Not all countries in the European Union will join the Euro. Not just Britain, we have an absolute copper bottomed opt out, written into all of the treaties, there is no obligation on us to join the Euro. But, I believe, there are other countries in the European Union who have no early, or immediate or indeed, longer than that prospects of joining the euro…”

Another to cast doubt on Unionist claims was Dr Fabian Zuleeg, Chief economist, European Policy Centre and Prof Drew Scott, Europa Institute, University of Edinburgh who in a letter to the Scotsman on 2nd November 2012, wrote:

“Under EU law as it stands at present, unless an independent Scotland (a) opts to introduce a new currency and break with sterling; (b) voluntarily opts to peg its new currency at an agreed euro-exchange rate inside the ERM; and (c) then delivers stability of that pegged value inside the ERM for two years then it is not technically possible for an independent Scotland to be required to adopt the euro.

This is precisely the approach followed by Sweden since EU membership in 1995, and that is why it may continue to remain outside the eurozone while complying with EU law. Consequently, whatever the merits or not of joining the euro, currently there is no legal mechanism which can enforce eurozone membership for countries that opt to remain outside the ERM.” 

A long list of respected independent experts have each backed the Scottish government’s stance on a sterling zone with many highlighting the benefits to the rest of the UK of such an agreement.

The list includes:

Charlie Jeffery, Professor of Politics and Director of the Academy of Government, University of Edinburgh, House of Lords, Evidence Session, Wednesday 24th October 2012:

“The debate here is now dominated by that single option—if Scotland votes yes, it will use the pound sterling.  That is an option that has attractions for the advocates of independence by providing a sense of reassurance and continuity, but I think it is probably also an option that has significant popular resonance. So I think in both senses, with a special emphasis on popular resonance – we perhaps all too easily lose sight of what citizens think and want – the pound sterling is the best option in an independent Scotland.”

Jeremy Peat, David Hume Institute, House of Lords, Evidence Session, Wednesday 24th October 2012: 

“There are a whole host of interdependencies between the economy of Scotland and the economy of the rest of the United Kingdom. That constitutes a very good reason, at least initially, for the maintenance of exchange rates to create certainty between Scotland and the rest of the UK, and hence continuing with sterling as the currency has advantages.” 

Professor Alex Kemp, University of Aberdeen, House of Lords, Evidence Session, Wednesday 24th October 2012:

“From the point of view of the balance of trade, oil exports would be a big plus for the Scottish economy. If Scotland were part of the EU, there would be an obligation not to discriminate against EU partners on exports. It would depend on the open market as far as Europe was concerned. One point is worth bearing in mind. Although it is a big plus for Scotland, it would help the rest of the UK as well. If Scotland were in the sterling area, it would help sterling as well, as there would be a need to acquire sterling to buy the oil.”

The National Institute of Economic and Social Research, press release, Friday 3rd February 2012:

“Scotland’s economy is highly integrated with the rest of the UK; it seems likely therefore that Scotland and the rest of the UK are an optimal currency area, so it would be sensible for an independent Scotland to continue to use the pound sterling”.

David Blanchflower, Professor of Economics at Dartmouth College and former external member of the Monetary Policy Committee, Scottish Government Road to 2014 Blog, 23rd April 2013:

“It would make sense for Scotland to enter a formal monetary union with the rest of the UK with the Bank of England operating as central bank for the common monetary area.

“Independence within a currency union would represent a substantial increase in the economic responsibilities of the Scottish Parliament. A currency union would provide the full flexibility to vary tax and spending decisions to target key opportunities and challenges in Scotland – powers that are currently unavailable to the Scottish Parliament.”

Guardian, 23rd April 2013:

“I just think they [the UK government] has just made it up: it’s political more than economic…It’s certainly pretty likely, given how disastrous George Osborne has been, that if Scotland had had their own fiscal policy, they would’ve done better.”

Scotsman, 15th June 2012:

“It is probably not unreasonable [for Scotland to have representation on the Monetary Policy Committee].”

Crawford Beveridge, Chairman of Fiscal Commission Working Group, on the Scottish Government Road to 2014 Blog, 19th April 2013:

“The working group’s report was clear that the best currency option for Scotland – and the UK – would be to retain Sterling and continue with the Bank of England operating across a Sterling Zone as part of a formal monetary union… It could work seamlessly from day 1, would provide a continuing platform for trade and would help the division of assets and liabilities which are denominated in Sterling. With monetary policy determined at the Sterling Zone level, key opportunities for growth and tackling inequalities would flow from greater access to the key economic levers that would flow from such an arrangement.”

John McLaren, Centre for Public Policy for Regions, BBC Newsnight Scotland, 23rd April 2013:

“The fact that the Scottish Government is keen on keeping some kind of Sterling connection means that it’s likely that will go forward.  I can’t see the UK Government being so obstructive as to put conditions in place that are unacceptable.  So at the minute that looks like the favourite.”

Brian Ashcroft, Emiritus Professor of Economics in the Strathclyde Business School at the University of Strathclyde, Scottish Economy Watch blog, 29th November 2012:

“With a geographical share of oil revenues Scotland is close to paying its way, labour productivity levels are almost identical to the UK…although total factor productivity growth could be somewhat lower. Moreover, Scotland is a well developed market economy trading with many nations…For these reasons it makes sense for Scotland, if independent, to stick with sterling”

James Scott, formerly Executive Director of Scottish Financial Enterprise, Chief Executive of the Scottish Development Agency, and Deputy Secretary in the Scottish Office, Scottish Government Road to 2014 Blog, 23rd April 2012: 

“No one seriously believes that while we have had our own Scottish banknotes for so many years under the current Westminster arrangements, we would not be able to continue to do so as an independent country.”