Scottish independence: Professor discounts Nats’ MPC argument

A LEADING authority on the Bank of England has said it would not give an independent Scotland any say over the setting of interest rates or monetary policy once out of the UK.

Forrest Capie, professor emeritus of economic history at City University in London, said membership of the Monetary Policy Committee – which sets interest rates in UK – had never been allotted to regions across the British Isles.

He said: “I can’t see any reason why [an independent] Scotland would have a seat on the MPC. Membership is based on ability to do the job. It has nothing to do with regional sympathies.”

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The comments from Professor Capie – who has written a history of the Bank of England and on monetary policy in the UK – come after First Minister Alex Salmond and Deputy First Minister Nicola Sturgeon insisted last week that Scotland would be able to appoint a person to represent Scotland’s interests on the MPC.

They want to keep the pound after independence, and argue Scotland would be able to have a say on interest rates. Salmond cited the fact that the Treasury appoints four of the nine members of the board. After independence, he said, Scotland would “expect to be part of the appointments process” of the MPC.

However, the Treasury hit back afterwards that Scotland “would have no say” over its monetary policy, if it was independent.

Professor Capie said he agreed. “If Scotland became independent it would be leaving a monetary union, the UK.

“Why should it have a say in that union’s policy?”