Scottish independence: Treasury Secretary’s dire warning on future for independent Scotland

By DAVID MADDOX
Published on 03/07/2012 01:37

AN INDEPENDENT Scotland will have a large budget deficit, be overly reliant on oil revenues and would see financial services flee south of the Border, Liberal Democrat Chief Treasury Secretary Danny Alexander will claim today.

In a keynote speech, Mr Alexander will make his strongest attack yet on the economics. Speaking at a Scottish politics conference at Institute of Mechanical Engineers, he will also argue that for Scotland to continue to use the pound it needs political union.

He will say: “Those who propose independence recognise the importance of retaining monetary policy authority for the whole UK at the Bank of England.

“But we need to recognise that this has implications. Current difficulties in the eurozone show us that monetary union needs fiscal integration, meaning close and collective oversight of fiscal and financial policy.”

On oil revenues he will also claim cutting Scotland off from the rest of the UK could be dangerous. He will say: “To cut off Scotland from the rest of the UK means to rely too heavily on these volatile sectors – to bet the economy each year on the financial markets and on oil prices.

“Indeed, the Office for Budget Responsibility are forecasting oil revenues to fall substantially as a percentage of GDP over the next 15 to 20 years.”

He will add: “There are questions around the feasibility of their oil ‘wealth fund’ proposals, too.”

Mr Alexander is set to say there were severe implications for the financial services sector, for which Edinburgh is one of the main centres in Europe.

“It would damage the close ties with the rest of the UK financial industry, particularly the City of London, as well as access to the markets that the UK provides both nationally and internationally.

“Unless the Scottish Government sets out a credible position on how to supervise and regulate a financial sector industry, it cannot be taken for granted that the industry would be content to remain in Scotland.”