Derek Mackay accused of “full retreat” on new Scots currency plan

The SNP leadership has been accused of a “full retreat” on its new policy to adopt a stand-alone Scottish currency after independence.

Derek Mackay.

Finance Secretary Derek Mackay today sought to reassure Scots that the switch would not happen until “residents and businesses” are prepared, as he addressed MSPs at Holyrood.

The UK pound would be used in the interim, but this would leave Scotland’s monetary policy in areas like interest rates in the hands of the UK Treasury.

Opponents claimed that the proposed new Scottish currency would be “catastrophic” for families and businesses.

The SNP leadership suffered an embarrassing defeat at the party’s conference on Saturday as delegates voted to fast-track the proposed transition to a new currency “as soon as is practicable” after a Yes vote, with a decision to be taken on the new currency within five years of independence.

But Mr Mackay told MSPs today: “Our position is clear - until a new currency can be safely and securely established in the interests of the whole economy, the currency of an independent Scotland should continue to be the pound sterling.”

The new policy marks a departure from the 2014 plan to retain the pound in a currency union with the rest of the UK. The leadership did see off party activists seeking to ditch six fiscal tests to be met before the transition to a new currency takes place. Mr Mackay said today one of these is the “financial requirements of Scottish residents and businesses.”

Others include bringing down the country’s deficit, as well as building up cash reserves and credibility of the country’s new central bank.

“Our proposals are to keep the pound in the immediate term,” he added.

“An SNP Government will take the steps necessary to enable the Scottish Parliament to authorise the preparation of a Scottish currency as soon as practicable after independence.”

Nationalist MSP Bruce Crawford, convener of Holyrood’s Finance committee, also sought to play down the impact of the new policy.

“The currency that the people of Scotland will use the day before an independence vote will be the same currency they will use the day after, the day after that and the day after that - that being the pound.”

But the Tory Finance spokesman Murdo Fraser accused the SNP of seeking to backtrack on its new economic plan.

“That’s been three days since the vote at his conference and already the cabinet Secretary is in full retreat form the position set out at the conference,” he said.

Labour Finance spokesman James Kelly said the pound would be “immediately replaced” by a new Scottish currency.

“The effect this would have on people’s mortgages, savings and pensions is that they would need to be converted into a new currency from sterling at a cost of up to 30%.

“This would have a catastrophic impact on business and the economy.”

Scottish families and businesses would be “significantly worse off”, he added.

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