Independence: Lack of currency is ‘total madness’

THE eminent economist Peter Jay has claimed Alex Salmond’s plans for an independent Scotland without its own separate currency amounts to “total madness”.

Peter Jay argues that Scotland could have greater control over economic policy with a separate currency. Picture: TSPL

Speaking at an Edinburgh Business School seminar, the former non-executive director of the Bank of England argued that the whole point of being independent was to have a separate currency, so that Scotland could have greater control over economic policy.

Salmond believes that an independent Scotland should share the pound with the rest of the UK in a formal currency union that would see the Bank of England ­remain responsible for monetary policy. A currency union would also seeScotland would have the same exchange rate as the rest of the UK.

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Jay, a former US ambassador and well-known broadcaster, said: “I used to argue very strongly that if I was a Scotsman I would vote for ­independence for one reason and one reason only – in ­order to be able to have the separate currency and so to cut Scottish economic policy free from the entanglements of the imposed single ­currency at the UK centre.

“It is with some astonishment but no doubt due ­humility, as to the imperfections of wisdom of a Sassenach, that I find that now the issue has become truly hot and truly important… that the major party most strongly advocating independence rejects a Scottish pound, and to me… this is an act of total madness.

“The whole point of having independence is in order to have a separate currency and therefore an independent economic policy and therefore greater prosperity and equity in Scotland. If I was a Scotsman, that is what I would want.”Jay added: “I am absolutely dumbfounded to find that there are advocates of this important political step who nonetheless exclude the one thing that would make it desirable and successful - but that’s my point of view”.

Last night a spokesman for the SNP Finance Secretary John Swinney said: “No-one would argue that countries like Germany, France, Finland, Austria and the Netherlands – which share a currency – are not independent. Independence will give Scotland access to 100 per cent of our tax revenues – compared with seven per cent under devolution – and the full fiscal levers and welfare powers which will enable us to use our immense wealth to build a fairer society and more prosperous economy.”

The spokesman added: “Mr Jay is of course entitled to his view, but the most recent Social Attitudes Survey found that the vast majority of people in Scotland support the Scottish Government’s position of an independent Scotland continuing to use the pound in an agreement with the rest of the UK.”