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

UK 'will never agree to a currency union after independence vote'

THE United Kingdom will never agree to a currency union with an independent Scotland, foreign exchange specialists have predicted.

Currencies Direct, which helps small businesses involved in export or import with currency conversion, said that the level of economic integration needed for such a move would "fly in the face" of the reasons behind a Yes vote.

Scottish ministers have called on Westminster politicians to agree to a so-called "sterling-zone", insisting the move would benefit both Scotland and the rest of the UK. But the Treasury has warned that such a move would be "extremely challenging".

Critics claim that even if a currency union could be agreed, it would mean severe restrictions on an independent Scotland's tax and spending.

Alistair Cotton, corporate dealer with Currencies Direct, said: "Currency union will not be agreed by either party as the level of economic integration needed on both sides flies in the face of the rationale behind independence."

He also called on pro-independence supporters keen for Scotland to go it alone with its own currency to give up that campaign. That idea should be "put to bed to stop it unnecessarily detracting from the referendum debate," he said.

And he warned that the idea of creating "a Central or Reserve Bank of Scotland fails to take into account the practical and financial hurdles of creating such a complex institution.

"It is a herculean task that should rank very low on Scotland's priorities at present.

"This is one situation where the harsh realities of the volatile foreign exchange market should take precedence over political point-scoring and nationalistic fervour."

At the weekend Alistair Darling, the leader of Better Together, said Alex Salmond must reveal his secret "Plan B" for Scotland's currency if calls for a sterling-zone fail.

Mr Darling said that "no one but a fool would go into a negotiation if they hadn't got a plan B",

A Scottish Government spokesman said: "An independent Scotland will keep the pound as part of a Sterling Area alongside taking on full responsibility for levels of taxation, revenues and public spending in Scotland.

"The pound is as much Scotland's as it is the rest of the UK's and the Scottish Government has put forward sensible proposals for a formal monetary union that would ensure both governments had full flexibility over their fiscal policies.

"A currency union is in the UK's interests due to the contribution Scotland makes to the Sterling Area, including its contribution to the UK's balance of payments. The UK exports more to Scotland than to Brazil, South Africa, Russia, India, China and Japan put together."

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.

189375