Top Salmond aide knocks independence

ONE of Alex Salmond's top economic advisers warned yesterday that there was no way an independent Scotland could have bailed out RBS.

John Kay, a member of the First Minister's Council of Economic Advisers, said the question of what an independent Scotland could have done with the bank was too frightening even to raise.

Writing in the Financial Times, he said: "What would have happened if the struggling Royal Bank of Scotland, whose principal retail operation is the English NatWest bank, had been headquartered in an independent Scotland?

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"It is only necessary to frame the question to want to go to great lengths not to have to answer it."

Opposition politicians said Mr Kay was right and the Scottish Government had to come round to his point of view.

Jeremy Purvis, for the Liberal Democrats, said: "The SNP's financial argument for an independent Scotland is economically illiterate.

"The balance sheet of RBS is 15 times greater than the GDP of Scotland. The injection of capital needed to save RBS from collapse would have swallowed up Scotland's entire budget."

Derek Brownlee, for the Tories, added: "John Kay is, in Alex Salmond's own words, one of Britain's leading economists. These comments will not have been welcomed by the First Minister but there is no point in having a team of independent advisers if they are not free to speak their mind."

A spokesman for the First Minister stressed how important it was to have advisers from different political backgrounds.

He said: "We have them because they are independent thinkers. We don't want them to agree with every government policy – there would be no need for an independent economic forum if that was the case."

He added that the banking crisis was a "legacy of the Union".

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The First Minister insisted during a visit to China yesterday that Scotland's financial services industry still had "huge strengths".

But he admitted the sector north of the Border had been "badly shaken" by the high-profile problems of some banks – including RBS plans to shed 9,000 jobs.

Mr Salmond was in Shanghai on the latest leg of his official visit to China, where he met the city's financial services director-general Dr Fang Xinghai.

"Financial services are badly shaken, and as this week's RBS announcement demonstrates, jobs are continuing to be lost," the First Minister said.

"But I believe that Scotland has what it takes to rebuild growth and prosperity for all."