Who sets rates?

Published on 07/11/2012 00:39

It is clear from his letter criticising Gordon Brown that 
C Hegarty (6 November) does not realise central banks play a major part in determining the interest rates charged by the commercial banks.

As the Nationalist policy is to have the Bank of England as central bank for an independent Scotland, which would 
set its interest rate according to the necessities of the remaining UK, this would have the effect, 
as Mr Brown argued, of mortgage rates in Scotland being 
decided by events outwith
Scotland.

Mr Hegarty also parrots the ScotNat line about Scotland generating 9.6 per cent of UK tax revenues while receiving only 9.3 per cent of expenditure.

Surely he realises that 9.3 per cent of government expenditure is a much higher figure in actual monetary value than 9.6 per cent of taxation – the difference having to be borrowed – which would obviously also apply in an independent Scotland if the same figures were maintained.

Ian Lewis

Mayfield Terrace

Edinburgh