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SNP and Bank of England at odds over pound ‘talks’

SNPs John Swinney made the comments earlier this week. Picture: TSPL

SNPs John Swinney made the comments earlier this week. Picture: TSPL

  • by TOM PETERKIN
 

THE Bank of England has rebuked John Swinney by suggesting the finance secretary falsely claimed the Scottish Government had discussed its plans to keep the pound with the 
financial institution.

In a highly unusual move, the Bank issued a statement last night contradicting Mr Swinney’s claim that “technical discussions” on a currency union proposal had taken place.

The Bank’s decision to clarify the situation comes amid continued attacks on the Scottish Government’s currency plans.

First Minister Alex Salmond has insisted that an independent Scotland will be able to keep the pound in a formal currency union, which involves sharing the Bank as a lender of last resort with what remains of the UK.

Labour, the Conservatives and the Liberal Democrats have all ruled out a formal currency union, arguing that such an arrangement would not be in the interests of England, Wales and Northern Ireland.

Mr Swinney’s comments were made earlier this week when he reacted to Bank Governor Mark Carney’s warning that a currency union threatened Britain’s financial stability.

The finance secretary said: “The Scottish Government has had technical discussions with the Bank of England regarding our proposal for a currency union.”

The Bank, however, took issue with Mr Swinney’s version of events and took the rare step of issuing an official response.

Its statement said: “To be clear, consistent with its statement in December 2012, the Bank of England has not entered into discussions with representatives of the Scottish Government about proposals for future monetary arrangements in Scotland.”

The statement went on to say that discussions with the Scottish Government had been limited to answering “technical questions”.

Better Together leader Alistair Darling claimed he could not remember a time when the Bank had had to “rebuke” a politician in “such stringent terms”.

Mr Darling said: “Yesterday John Swinney told us the Scottish Government was having discussions with the Bank of England on a currency union.

“Today, the Bank of England have said categorically that no such discussions on future monetary arrangements took place.

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“In two weeks, the ballot papers will start to be issued for postal votes. Imagine what would have happened if people had only found out about this after they had voted.”

The Scottish Conservative leader Ruth Davidson said: “It is utterly embarrassing that Scotland’s finance secretary has had to be slapped down by the Bank in this humiliating manner.”

Last night, the Scottish Government responded by saying: “The Scottish Government has had ongoing technical discussions with the Bank of England, as the Bank itself has previously confirmed.”

Meanwhile, pressure mounted on Mr Salmond’s economic plans when an eminent economist Professor Ronnie MacDonald, warned a currency union would cause “massive” unemployment and put Scotland into a seven-year slump.

Prof MacDonald claimed the disintegration of a currency union would cost Scotland £100 billion. Speaking at a Better Together event, he said Plan A was “fundamentally flawed”.

The economist, who holds the Adam Smith chair of Political Economy at Glasgow University and is an adviser to the IMF and central banks, said reliance on oil would unbalance Scotland’s economy making the non-oil sector uncompetitive.

A Scottish Government spokesman said: “The opposition narrative seems to be that having oil is a dreadful curse for Scotland when it has been a benefit for every other country which has it.”

SEE ALSO:

Bank of England prepared for Scottish independence

Scottish independence poll: currency key for women

 

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