Independence: Salmond urged to ditch pound

AN INDEPENDENT Scotland should adopt its own currency in order to take full control over its economy, leading Yes campaigners have said, warning that Alex Salmond’s keep-the-pound policy is too “conservative”.
Former leader of the SNP Gordon Wilson has backed Jim Fairlie's view. Picture: TSPLFormer leader of the SNP Gordon Wilson has backed Jim Fairlie's view. Picture: TSPL
Former leader of the SNP Gordon Wilson has backed Jim Fairlie's view. Picture: TSPL

Former SNP deputy leader Jim Fairlie warned yesterday that if an independent Scotland kept sterling, it would not have the economic levers necessary to pursue its own course.

He was backed by Gordon Wilson, a former leader of the party, who also warned that if there was to be any ­economic advantage for independence, Scotland needed all the tools at its disposal to benefit.

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A third pro-independence figure, ­Scottish Socialist leader Colin Fox – who sits on the advisory board of the Yes Scotland campaign – also said that if Scotland kpt the pound with all the ­restrictions it entailed, then many voters would end up asking what was the point of change.

And he predicted the SNP would end up backing an independent currency.

Their warnings come after a week in which the debate over the currency ­options for an independent Scotland have come under growing scrutiny.

Mr Salmond had positioned the SNP in favour of a “sterling zone” covering the UK after independence, within which Scotland would be able to deploy “full ­fiscal freedom”, he said.

However, Chancellor George Osborne last week warned that if the UK did agree to such a deal, there would be severe constraints. These could include the UK Treasury insisting that a Scottish chancellor puts their tax and spending plans to London for approval.

The row has seen figures in the pro-independence movement call for Mr Salmond to keep open the option of Scotland developing its own currency, as part of a “bolder” approach to reform.

Mr Fairlie was deputy leader of the party from 1981-84, but quit the SNP over its support for EU membership.

In an article for the pro-­independence Options for Scotland group, he said that an independent currency was “the only option which will allow a Scottish government the degree of economic control necessary to diverge from the history of mismanagement of the Scottish economy since the end of the Second World War”.

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He added: “If sovereignty means anything at all to the Scottish people, control of their own currency is a prerequisite.”

Former leader Mr Wilson, who set up Options for Scotland, said: “If there is to be any economic advantage with independence, it is to ensure we have all the tools to manage its economy differently from the Union.”

Mr Fox said of the SNP: “Their latest view seems to me entirely in keeping with their softly-­softly, and dare I say, conservative approach to selling independence as a whole to those they believe are frightened by the concept of change.

“I suspect they may well ­advocate a new Scottish currency being established in Scotland in due course.”

SNP MSP Annabelle Ewing said: “The pound is Scotland’s currency every bit as much as it is the rest of the UK’s, and Scottish Government policy for a formal sterling area post-­independence is clear. One of the great benefits of independence is we would have access to and control 100 per cent of the revenue raised in Scotland.”

Blair McDougall, the head of the Better Together campaign, said last night: “Everything that the SNP campaign asserts does not stand up to the slightest scrutiny. When challenged, their policies simply fall apart.”

The SNP government has pointed to the work of its Fiscal Commission, chaired by former Scottish Enterprise chief executive Crawford Beveridge, which declared earlier this year that retaining sterling and using the Bank of England in a formal monetary union was the “best option” for the country.

The commission said constraints would be required to ensure the new country would gain confidence, but that it could still use the new arrangements to pursue its own tax and spending policies.

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Finance secretary John Swinney has argued the arrangement would be in the best interests of Scotland and the whole of the UK. Scotland would have “full fiscal freedom”, officials said.

The SNP’s policy is still to have a referendum on joining the euro, but given the current political problems on the continent, ministers have said they “cannot foresee the set of circumstances” when they would call it, suggesting they intend to keep the pound.

Pro-Union parties seized on the dispute last night, saying it showed there was confusion in the pro-independence movement over the best course to take.

Scottish Liberal Democrat leader Willie Rennie MSP said: “If this is the chaos inside the camp, how do undecided voters looking on from outside have a hope of deciphering what Scotland stands to lose on currency if it left the UK?”

Labour’s Ken Macintosh said: “The SNP and the rest of the Yes campaign appear to be facing in different directions on basic issues, such as what currency to use or even whether to be part of the European Union or not.”

The four currency options for Scotland post-independence

A formal currency pact: Scotland would remain with the rest of the UK in a sterling zone governed by the Bank of England. The official SNP position is this would be in the interests of both London and Edinburgh, helping to maintain trade and boost the currency. Opponents argue a government representing the rest of the UK might decide the risks would outweigh the benefits, and pull the plug on any such arrangement.

Unilateral use of the UK pound: An independent Scotland could continue to use sterling without Westminster’s agreement. However, this would leave Scotland dependent on imported capital, with no influence at all over monetary policy and only limited ability to provide liquidity to its finance sector.

Creating Scotland’s own currency: A Scottish currency would allow Holyrood maximum flexibility, allow its new central bank to act as a lender of last resort and enable it to oversee its own fiscal policy. But analysts say a new currency could see borrowing costs rise without the buttress of the UK economy.

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Adoption of the euro: The eurozone crisis put an end to this as the SNP’s favoured option. Anti-independence campaigners have warned Scotland might be forced to adopt the currency as a condition of membership of the EU, but forced adoption of the euro appears unlikely given other EU members remain outside the currency.