No independence

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Alex Salmond asserts that a Yes success on 18 September will deliver an “ independent” country for Scotland. That is not true.

In fact, as a separate country Scotland would be dependent on Great Britain as never before, because his plans and proposals include and rely on the retention of the pound and a currency union between the two countries. The result would be dependence on London for Scotland’s fiscal and economic policies.

Obviously, the Bank of England and the UK Treasury would pursue policies beneficial to Great Britain. No regard would need to be given to Scotland’s economic interests when fixing interest rates or taking any other steps that might affect the value of sterling. Thus Scotland would be compelled to follow or accommodate the economic policies of the British government in fixing its own budget, and making decisions relating to tax and public spending.

A currency union would mean the Bank of England would become the lender of last resort for Scotland. Clearly the terms of any currency union would have to be negotiated; they would almost certainly include a requirement for the deposit by the Scottish government with the Bank of many billions of pounds as security for its support in the money markets. Those billions would have to be found within and from Scotland’s revenues and reserves, thus reducing the state’s liquidity – meaning possibly more taxes or cuts. In short, Scotland would be in hock to the Bank of England and the British government.

What Mr Salmond is really promising is not independence: it is no more than partial autonomy.