Salmond confident on post-independence currency union


  By Martin Kelly
First Minister Alex Salmond has re-affirmed his party’s plan to keep the pound in the event of Scottish independence arguing that it is in the best interests of both Scotland and the rest of the UK.
Interviewed by Chanel 4’s John Snow, Mr Salmond repeated the argument made by his Finance Secretary John Swinney that the £40bn contribution made to the rest of the UK balance of payments was a compelling reason for a currency union to be agreed.

The SNP leader also hit back at criticisms of the policy by leader of the Better Together campaign Alistair Darling, by saying that the former Labour Chancellor lacked credibility after presiding over the collapse of the UK’s banking industry.

The interview followed comments from several prominent pro-independence figures who have questioned whether an independent Scotland would be better off by adopting its own currency.

However Mr Salmond has insisted that keeping the pound post-independence remains his party’s favoured option.

Asked if he accepted that entering into a currency union will constrain Scotland’s economic freedom, Mr. Salmond replied:

“Well, can I just point out that Sterling is Scotland’s currency as well at the present moment, it’s not the property of George Osborne.  You’d have to have a sustainability arrangement – the sort of thing we spelled out in the fiscal commission report – where Joseph Stiglitz and another Nobel laureate Jim Mirrlees set that out.

“You’d have to have a sustainability arrangement, but that’s what you would need. You wouldn’t have to have oversight of Scotland’s budget, or for that matter Scotland having oversight of England’s budget. You’d just need sustainability in terms of borrowing, in terms of overall debt levels.

“But, let me say, last year Scotland was over £4 billion relatively better off than the UK, so we’ve got a lot of freedom of manoeuvre on the income and expenditure side of our accounts.”

He also pointed out that the Bank of England would in fact make a profit if an agreement was reached on a currency union and said: “When the central bank is the lender of last resort, it makes a profit out of being lender of last resort.  That’s just a fact.”

The First Minister also responded to claims that Scotland was solely responsible for the collapse of HBOS and RBS by pointing out that the vast bulk of transactions happened, not in Scotland but south of the border and that the dominant partner in HBOS was in fact the English based Halifax.

Mr Salmond also reminded the interviewer that the money used to save the banks was in fact an investment that would produce a return at some point in the future and added:

“Financial intervention and equity share, that’s owned currently, that is an asset, and at some point it will be sold and will be an asset. We’re putting forward a prospectus that the Royal bank of Scotland and HBoS – Lloyds as it is now – are not only Scottish banks in terms of domestic assets.

“The overwhelming majority, not just of the assets but of the bad debt occurred, not in Scotland, but here (London) or in international markets, supervised by the FSA and Alistair Darling.”

Questioned on how much financial independence an independent Scotland would enjoy, the First Minister said:

“The monetary policy would be run by the bank of England. The taxation and spending would be run by in Scotland by the Scottish finance minister.

“If we take last year as an example, we had that £4 billion flexibility, which – believe me – is a large amount of money in terms of Scotland.  It’s like, you know, almost £40 billion in UK terms. We could have done a great deal to revive the economy.

“I believe the essence of economic independence is to control your taxation, control your spending. That’s what allows you to revive your economy and develop a fairer, more prosperous society.”

However the SNP leader reserved his most scathing criticism for the leader of the anti-independence Better Together alliance, Labour MP Alistair Darling who the First Minister insisted shouldered most of the responsibility for the collapse of the British Banks.

Pressed by the interviewer who claimed Mr Salmond had shown poor judgement when sending a good luck letter to former banker Fred Goodwin, the First Minister claimed a letter paled when placed alongside the role played by Mr Darling in the collapse of Britain’s banking sector.

Unionists have claimed a currency union between Scotland and the rest of the UK would be difficult to achieve.  However, most independent analysts have said that such an agreement would be in the best interests of both parties immediately after independence.

In an interview on the BBC in January, Mr Darling himself admitted that such an arrangement post-independence would be “logical” and “desirable”.

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