• Text size      
  • Send this article to a friend
  • Print this article

Salmond: Scotland could keep the pound short-term

ALEX Salmond has sparked fresh ­questions about his currency proposals by saying an independent Scotland could keep the pound unilaterally as a "transitional" option.

SPINning IT: Alex Salmond tried his hand at bowling on the campaign trail in Arbroath yesterday. Picture: Jeff J Mitchell/Getty Images
SPINning IT: Alex Salmond tried his hand at bowling on the campaign trail in Arbroath yesterday. Picture: Jeff J Mitchell/Getty Images

In an interview, the First Minister appeared to back the verdict of his expert panel of economists, the Fiscal Commission, on "sterlingisation".

The panel supported a currency union with the rest of the UK, which was endorsed by the Scottish Government in a report early last year.

It also concluded that so-called "­sterlingisation" - keeping the pound without a formal currency union - was an option, but not in the long-term.

Mr Salmond's comments were seized on by Labour's Douglas Alexander, who challenged him to explain what might follow temporary use of the pound.

The row came as the First Minister marked the start of the final month of campaigning with a visit to Arbroath.

At the same time, Prime Minister David Cameron dismissed Mr Salmond's claim Scotland's NHS was threatened by any move towards privatisation in England, amid fresh polling evidence that the Yes camp is gaining ground.

The First Minister has faced relentless pressure to spell out his preferred alternative to his plan to seek a currency union in the event of a Yes vote. He has argued it would be in the best interests of both countries. It has been rejected by the Conservatives, Liberal Democrats and Labour, who claim it would be too risky for the UK and would place too many constraints on an independent Scotland.

At the weekend, Mr Salmond again insisted he would not reveal his Plan B on currency until after the referendum, saying he did not want to show what he would "settle for" prior to negotiations.

However, his repeated insistence that an independent Scotland could keep the pound without an agreement with the UK has prompted speculation that the arrangement is a de facto Plan B.

Asked yesterday on Radio Scotland's Good Morning Scotland whether he believed it was a viable alternative, he said: "As a transitional option, the Fiscal Commission said it was viable, but there are a number of viable options."

He added: "But the best option for Scotland is keeping the pound in a currency union." He said the pro-UK parties would "sing a different tune" and drop their opposition to a currency union in the event of a Yes vote.

Repeating his warning that an independent Scotland would not shoulder its share of the UK's £1.4 trillion national debt - equivalent to £5 billion a year in payments - unless a currency union was agreed, he said: "What they [the pro-UK parties] are talking about is seizing the assets of the Bank of England and not giving Scotland any share, in which case they would have to stump up for all the national debt."

Under sterlingisation, independent Scotland would have no central bank, prompting fears much of the financial services industry would head south to keep Bank of England protection. Scotland would also have no say in setting interest rates.

The sterlingisation idea was not seriously entertained by Mr Salmond's Fiscal Commission when it endorsed his currency union proposal in a major report last year.

In it the panel said of sterlingisation: "Advanced economies of a significant scale tend not to operate in such a monetary framework. Though an option in the short-term, it is not likely to be a long-term solution."

Douglas Alexander, Labour's Shadow Foreign Secretary, said: "We need some basic, straightforward answers from the First Minister. This morning he talked about transitional arrangements on the currency. Transition to what? The postal ballots drop in just a week's time, and still we don't have the most basic answer on what will Scotland's currency be."

The Paisley MP, who joined Better Together supporters in Glasgow yesterday to mark the campaign entering its final month, added: "What the people want isn't so much a new Declaration of Arbroath but the declaration of some answers on the currency, on Europe, on how they will meet the additional costs and consequences of independence."

The currency row will continue to overshadow the referendum campaign today.

Visiting a firm in Scotland, Chuka Umunna, Labour's Shadow Business Secretary, will warn that uncertainty over the currency is "putting at risk the success of Scottish businesses and jobs across the country".

But in a lecture at Glasgow Caledonian University Crawford Beveridge, who chaired the Fiscal Commission's currency group, will repeat his support for a currency union, calling it "the best route for both Scotland and the rest of the United Kingdom".

Contextual targeting label: 
Finance

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

255608