Leading economists say Scotland keeping pound after Yes vote is in rUK’s best interests


  By Martin Kelly
A group of leading economists are set to argue that Scotland keeping the pound after independence would be in the best interests of the remainder of the United Kingdom.
According to the Sunday Herald newspaper, the independent group of experts will cast doubt on Unionist claims that a Westminster government would try to block a newly independent Scotland from joining a Sterling zone.

The newspaper quotes the group’s chair, Crawford Beveridge, as saying: “In our view, it would be in Scotland’s interests to retain sterling immediately post-independence.

“It would benefit the rest of the UK to maintain a key trading partner as nearly 10% of the existing UK economy Scotland would remain one of the largest trading partners of the UK economy.  Scotland’s economy is strong enough and sufficiently aligned with the rest of the UK that a separate currency would not be necessary.”

The independent body, the Fiscal Commission Working Group, is an offshoot of the First Minister’s Council of Economic Advisers, and will report tomorrow on the economic framework a newly independent Scotland might follow.  The report, on a Macroeconomic Framework for Scotland, will form a blueprint for monetary policy, financial stability and fiscal policy.

Established by the First Minister last March and chaired by Crawford Beveridge, the technical group brings together the leading thinking of Professors Andrew Hughes Hallett; Sir Jim Mirrlees; Frances Ruane; and Joseph Stiglitz to oversee work to establish a fiscal and macro economic framework for Scotland.

The group’s task is to provide advice and proposals to the Scottish Government on the key areas of monetary policy, financial stability and fiscal policy, setting out a framework that has the potential to unlock Scotland’s full potential and improve the living standards of all within an independent Scotland.

On Monday Mr Beveridge will deliver their independent report, which will say that Scotland is a “wealthy and productive country . . . on a par with many other successful independent countries”.

Commenting before the report’s publication, Mr Beveridge said:

“It is a privilege to present this report to Ministers.  It is not the job of the Working Group to determine what path Scotland takes.  Instead the aim of the group is to use our expertise to provide advice and guidance to the government and to offer options for reform should a vote for independence be forthcoming.

“The task of the working group was to design a robust macroeconomic framework for Scotland post independence that delivers sustainable economic growth and a platform from which to tackle inequalities.

“The first report of the Fiscal Commission Working Group has confirmed that, by international standards, Scotland is a wealthy and productive country.  In terms of output per capita it is on a par with many other successful independent countries.

“The proposition the Fiscal Commission Working Group will put forward is a workable blend of autonomy, cohesion and continuity.  It is a well engineered model for day one of independence.”

The report’s publication will coincide with the release of the first of thirteen monthly documents drafted by the UK government in an attempt at persuading Scots not to vote Yes in 2014.

The pro-Union document will be launched by Liberal Democrat Scottish Secretary Michael Moore, Tory Scotland Office minister David Mundell, and former Lib Dem MSP and now Advocate General, Jim Wallace.

The document is expected to repeat many of the claims already voiced by pro-Union politicians, and will include claims relating to the EU membership of an independent Scotland and attacks on the Scottish government’s estimate of a 16 month independence transition period.

The Scottish Secretary claimed that Monday’s document would contain evidence from an “expert” that backed the UK government’s view that Scotland would cease to be a member of the EU following independence.

Labour MP Alistair Darling, who heads the Labour, Conservative and Lib Dem alliance Better Together, recently suggested that a newly independent Scotland would face a wait of nearly a decade in order to regain its EU membership.

However recent comments by EC President José Manuel Barroso, cited by Unionists as proof that Scotland would lose its EU membership, are unclear.

In the latest official response, the EC President said: “Scenarios such as the separation of one part of a Member State or the creation of a new state would not be neutral as regards the EU Treaties.  The Commission would express its opinion on the legal consequences under EU law upon request from a Member State detailing a precise scenario.”

However, speaking on the Sunday Politics Show, Michael Moore again rejected calls for the UK government to make a joint representation to the EC in order to seek clarification on the process by which Scotland would seek to continue its EU membership.

A spokesman for the coalition Government claimed that an independent Scotland would be too small to carry significant influence in the EU, and compared it to Denmark, describing the independent Scandinavian nation as “nowhere” in terms of key European negotiations.

Speaking to the Sunday Herald he said: “At these European summits, you see all the key players moving around, the French, the Germans and the British.  But where are the Danish?  They’re nowhere.  It’s not that Denmark is not significant, but it’s not as important as these other nations, simply because of its size.”

Commenting ahead the release of his own government’s anti-independence document, UK Prime Minister David Cameron said that independence threatened the “unbreakable bonds between the people of these islands”.

Saying that he wanted to appeal to the “head and heart” Mr Cameron cited two world wars and the London Olympics as examples of why Scots should vote No in 2014.

Mr Cameron said: “Britain is admired around the world as a source of prosperity, power and security.

“Those glorious Olympics last summer reminded us just what we were capable of when we pull together: Scottish, English, Welsh, Northern Irish, all in the same boat – sometimes literally.

“If you told many people watching those Olympics around the world that we were going to erect barriers between our people, they’d probably be baffled.  Put ­simply: Britain works.  Britain works well.  Why break it?”

The prime minister criticised the SNP’s transition to independence timetable, saying: “I know those arguing for independence are already preparing their separation transition plan, as though they’ve got this in the bag, but to me that is wrong.

“It’s like fast-forwarding to the closing credits before you’ve been allowed to see the movie.”

However Mr Cameron’s comments were described by Deputy First Minister Nicola Sturgeon as “entirely negative”.

Responding, Ms Sturgeon said: “The Electoral Commission has called on both sides of the independence debate to provide more information to the people of Scotland and to work together to discuss what will happen in the wake of the referendum.

“We have agreed with the Electoral Commission and published information about the transition to independence following a Yes vote.

“The prime minister’s remarks suggest he is ignoring the Electoral Commission’s advice – despite the previous calls of the Westminster government for the Scottish government to follow their advice.

She added: “Instead of spelling out a positive case, David Cameron is simply continuing with an entirely negative attack.  The pro-independence campaign is making the positive case and preparing for the future.

“By placing himself at the head of the No campaign, David Cameron is simply reminding people that he heads a government that Scotland didn’t vote for and that independence is the only way to ensure that Scotland always gets the government it votes for.”