Osborne currency threat should not be taken seriously say experts


  By Martin Kelly
Threats by Tory Chancellor George Osborne to block a currency union between a newly independent Scotland and the rest of the UK should not be taken seriously, and is part of a political agenda, a Scottish Parliamentary Committee has heard.
Giving evidence in front of the Scottish Parliament’s Economy, Energy and Tourism Committee, Crawford Beveridge, who is Chair of the Fiscal Commission Working Group set up by the Scottish Government, has said the UK Chancellor’s stance is not credible.

“I don’t think any of us on the committee believe for a minute that the chancellor is serious.” He said in response to a question on George Osborne’s threat to block an agreement on currency.

Mr Beveridge said the statements from the Tory Minister were pre-negotiation political manoeuvring and added: “We warned in our report last year that, leading up to this, there was going to be a lot of political statements, but in our opinion, economics will trump the politics in this and good heads will prevail if there happens to be a ‘yes’ vote.”

Echoing views expressed by Newsnet Scotland at the time of the Chancellor’s initial announcement, Mr Beveridge suggested a currency union had not been ruled out altogether, and pointed out the Permanent Secretary to the UK Treasury had come out against a currency agreement “as currently advocated”, giving the UK Chancellor “wriggle room” to negotiate a slightly modified agreement.

The UK Government’s political agenda was also hinted at by Mr Beveridge, who informed the committee that the Treasury had refused to even discuss the prospect of a currency union.

Asked if discussions had taken place between his group and the UK Treasury, he replied: “Alas, no. I mean we have tried very hard to engage the Treasury and others on these things and they do not want to have these discussions prior to an independence vote taking place.”

The Committee also heard from the former Chief Economic Adviser to Standard Life, Professor David Simpson, who praised the proposals put forward by the Fiscal Commission as being beneficial to business in Scotland and the rest of the UK – and described the posturing of the Westminster establishment on the issue as “very obviously” being part of a political agenda.

Commenting on the recent announcement from Standard Life that the company was making ‘contingency plans’ to relocate part of its business outwith Scotland in the event of a Yes vote, Professor Simpson said: “I must confess that I am slightly suspicious about the timing – not the substance of the concerns – because as I say there are legitimate concerns. I’m slightly suspicious of the timing of it.”

The academic told the committee that the uncertainty cited by Standard Life, which could be damaging Scottish businesses, could only really be resolved by the Westminster Government.

He added: “It’s up to the government in London, I think, to respond by at least discussing the offer that’s on the table and to the extent that they don’t discuss it, to that extent, uncertainty is heightened.  And, that can only be damaging for financial businesses which are registered in Scotland.”

Asked to respond to suggestions that the UK Treasury was working to a political agenda by refusing to engage with Mr Beveridge and his colleagues in the Fiscal Commission Working Group, professor Simpson replied: “I’m afraid that’s very obviously the case”

Commenting, Highlands and Islands MSP Mike MacKenzie said:
“Today’s evidence confirms what we already knew – that a currency union is in the best interests of people and businesses both north and south of the border. It has also lifted the lid on how economic experts view the Westminster establishment’s bluffing on the pound.
“Businesses and economists can see through the so-called Dambuster’s Strategy employed by Project Fear – designed to sow uncertainty and bully people in Scotland into voting No.
“As Crawford Beveridge made clear, 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.”