John Swinney: Keeping pound in everyone’s interest

Scottish Finance Secretary John Swinney. Picture: PA
Scottish Finance Secretary John Swinney. Picture: PA
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AN INDEPENDENT Scotland will retain the pound, and the existing situation relating to Scottish banknotes – underpinned by the 2009 Banking Act – will remain in place within a post-independence currency union.

The UK government has stated there is no legal bar to an independent Scotland having sterling as its currency, and the evidence, including the views of US economist Joseph Stiglitz and other members of the Fiscal Commission Working Group, shows that it is in the best interests of both an independent Scotland and the rest of the UK to have a sterling zone.

If it is the choice between listening to the views of Nobel laureate and world-leading economist Joe Stiglitz or listening to the scaremongering of Tory Chancellor George Osborne – whose economic competence is further downgraded with every passing day – I know who most Scots will listen to.

An independent Scotland using the pound will mean sterling’s balance of payments will be massively boosted by Scotland’s huge assets, including North Sea oil and gas, which alone swelled the UK’s balance of payments by £40 billion in 2011-12.

This policy offers freedom for Scotland to develop our own taxation and spending policies to boost growth and address inequality. At present, the Scottish Parliament controls just 7 per cent of Scotland’s revenue base, and that would only increase to 15 per cent under the terms of the Scotland Act.

With independence, Scotland will control 100 per cent of our revenues, which is what it needs to be to build a stronger economy and fairer society.

The combination – which only comes with independence – of keeping the pound, accessing Scotland’s abundant resources and taking decisions on tax and other economic policies that are right for Scotland, is the best way to boost jobs and growth.

Scotland’s finances are consistently stronger than the UK’s, generating more revenue per head than the rest of the UK in each one of the past 30 years, and Scotland has had a lower fiscal deficit than the UK over the past five years.

With the additional economic levers that independence will provide, and the up-to-£1.5 trillion asset base provided by Scotland’s oil and gas reserves, an independent Scotland will stand on a strong financial footing.

Indeed, the latest economic indicators show that Scotland’s economy is steadily strengthening, despite the policies of George Osborne.

The latest Bank of Scotland jobs report shows continued improvement in Scottish job market conditions, reflecting the positive trends from this month’s Labour Market statistics. The Bank of Scotland’s composite index for Scotland has increased to 53.0, stronger than the UK’s, which is 52.3.

These latest jobs figures follow on from GDP figures demonstrating Scotland’s economy is continuing to outperform the UK’s. Scotland now has a higher employment rate, lower unemployment rate than the UK, as well as stronger economic growth and youth unemployment figures that continue to improve and out-perform the UK.

On Thursday, the UK government will hear whether it has entered a triple-dip recession, or managed to cling on to weak growth.

This is the economic mismanagement Scotland is saddled with without independence. The Scottish Government is determined to build on the positive economic trend we are seeing in Scotland.

There is now a growing consensus calling on the Chancellor to change course on the UK’s failing economic policies. Last week, the IMF has said it may be time to consider adjusting the original fiscal consolidation plan – a view we endorse. And on Friday, Fitch became the second ratings agency to downgrade the UK’s credit rating in the face of the Chancellor’s pledge to retain triple-A status.

The No campaign previously praised the triple-A credit rating as a reason to vote No in Scotland’s referendum – that has been blown apart by their own economic incompetence.

With the full fiscal and economic powers of independence, the Scottish Government could do even more to create a prosperous and successful country, strengthening our economy and creating jobs.

You can bank on it.

• John Swinney MSP is the Cabinet secretary for finance, employment and sustainable growth.