Independence: CBI chief questions currency union

CBI Director General John Cridland. Picture: Reuters
CBI Director General John Cridland. Picture: Reuters
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CBI director general John Cridland yesterday cast more doubt over the prospect of an independent Scotland sticking with the pound.

He said there were “many unanswered questions” over the proposals for a currency union if Scotland broke free from its UK partners but wanted to retain sterling.

Without fiscal and monetary integration, he said there would be potential issues similar to those experienced in the eurozone.

In a speech to members of the Scotch Whisky Association (SWA) in Edinburgh, Cridland said: “The Treasury’s analysis of the currency options available to Scotland argues that a currency union, where the UK accounts for 90 per cent and Scotland 10 per cent of the economy, would be problematic.

“What would happen to the currency raises many unanswered questions. I think it would be difficult to sustain success by being apart.

“Would separate embassies work as well, or have the same impact for our commercial diplomacy, for instance, as the work undertaken by the UK Foreign Office? Our common laws and regulations make it more efficient to operate across the union, not to mention how they lay a strong foundation for us all to enjoy the benefits of our single market. We would all lose out if it were fragmented.

“There are many robust business and economic reasons not to break up the union, and the international successes we’ve achieved together are right up at the top of the list,” he added.

Speaking after his address to the SWA and to members of CBI Scotland, Cridland said the problems of a currency union would echo those of the 17 members of the eurozone who have pursued inconsistent policies.

Referring to exports, he said emerging markets had a huge appetite for western branded goods and he urged other businesses to follow the example of the whisky industry in building exports based on the value of British brands.

“We need to renew our role as leading trading nation – exporting more and more quickly.

“Our analysis across the piece has estimated that a successful re-orientation of our export mix could provide a £20 billion boost to GDP by 2020.”

He also confirmed the CBI’s backing for Chancellor George Osborne’s deficit-reduction plan, but said the CBI wanted to see more effort on the growth agenda.

“The CBI does not challenge the Chancellor on tackling the deficit, but we need to see more urgency on housing, transport and energy from both the Scottish and UK governments.”

Cridland said a push on supporting the construction industry would have significant benefits across the economy. “Every £1 spent on construction generates £2.84 of economic value and 90 per cent of the spending is in the UK. It creates jobs and it can be done quickly.”

He added there was evidence that the scheme to underwrite mortgage lenders in England was beginning to work. It has been extended beyond first-time buyers and he was waiting for the Scottish Government to do likewise.

On the continuing controversy over executive pay, he said there were signs that boardrooms were responding to public concern with greater transparency and more conditions attached to remuneration packages.