IN matters economic, I most certainly hesitate to tangle with Professor Ronald MacDonald (Letters, May 2)) of the Adam Smith Business School at the University of Glasgow. The doom-laden final paragraph of his letter points to financial Armageddon for many should an independent Scotland adopt sterlingisation in the short term.

Prof MacDonald bases his analysis on the “massive current account deficit of 10 per cent of GDP which represents £16 billion based on the latest Scottish Government statistics”. One assumes the figures refer to the Government Expenditure and Revenue Scotland (GERS) statistics for the period 2017/2018 which are based on Scotland being part of the UK and not as an independent country with vastly different priorities from the UK, such as HS2, Trident and so on. It is widely recognised that many of the GERS figures are compiled by estimation (some would say guesstimation), which is also acknowledged by the Fraser of Allander Institute. Furthermore, in a Herald article in December 2006 it was stated “GERS was conceived as a political, not as a statistical, exercise. We know this because the original correspondence from the then Secretary of State, Ian Lang, was leaked some years ago – he wanted it to 'undermine the other parties', saying 'this initiative could score against all of them'."

The current GERS figures are hardly an advertisement to remain part of the UK but it would be interesting if an economist could produce GERS figures for an independent Scotland no longer part of the UK but using the same sort of estimates as GERS and of course the same crystal ball.

Alan M Morris,

20 Kirkhouse Road, Blanefield, Glasgow.

NOT being a professor of Macroeconomics like Ronald MacDonald I am easily misled by figures taken from Government statistics, particularly those from disputed sources such as GERS.

When Professor MacDonald refers to the UK current account deficit being four per cent while Scotland's runs at 10 per cent, what proportion of oil revenue does he apportion to Scotland in his calculation? Is it a 10 per cent share (proportional to UK population), or is it 100 per cent, which would be an independent Scotland's share?

John Jamieson,

60 Craigie Road, Ayr.

IT is always disappointing when a reply to a published letter misrepresents the original, but particularly when the reply’s author is a respected professor in one’s alma mater (Glasgow University, Department of Political Economy as it was then).

Professor MacDonald never actually challenges any of the points in my letter of May 1. First, that the value of the pound is in long-term decline. Secondly, that the UK’s chronic balance of payments deficit is chronic. Thirdly, that HMRC’s Regional Trade Statistics (RTS) show the UK’s trade deficit with the rest of the world is disproportionately due to England. In that sense only Scotland had a surplus, though that does not include North Sea oil as RTS treats that as a UK export. Lastly, that continuing with the pound would mean further decline.

If Scottish electors are to make an informed choice between a Scottish currency and the pound, then a full understanding is needed of both. However, Prof MacDonald writes only of the claimed chaos and disaster of a Scottish currency while the alternative reality of the pound is never mentioned, far less discussed. However, given its continuous decline, and chronic balance of payments deficit, that is hardly surprising.

He insists the current deficit on trade could not be financed by foreign reserves from an independence settlement, so “there would be a considerable excess demand for foreign exchange on currency markets, and as in any market, the price of foreign exchange would have to rise which, in turn, implies a sharp devaluation of any Scottish currency”. Even if this came about to a significant degree, it is still at least similar to what I have shown for the pound. A loss of 23 per cent of value against the euro in 20 years is rather more than a fluctuation.

He also points to the “implications [a “sharply depreciated Scottish pound] would have for mortgages, pensions and other financial assets and liabilities” as if this never happened to the pound. In the 1980s Bank Rate averaged 11.5 per cent, varying between a low of 8.375 per cent (1987) and a high of 14.875 per cent just two years later. Fluctuation is part of using the pound as well.

Alasdair Galloway,

14 Silveron Avenue, Dumbarton.

WHEN Alasdair Galloway (Letters, May 1) refers to the long-term depreciation of the pound sterling he should consider that the Scottish pound was one-tenth the value of the English pound at the Act of Union.

The present Scottish Government seems intent on taking us back there.

Scotland is now the highest taxed part of the UK as a result of SNP policy.

G Gibb,

6 Chamberlain Street, St Andrews.

Read more: Letters: Yes campaign is perpetuating division in the nation

PROFESSOR Ronald MacDonald (Letters, May 2) appears to echo the concerns of the SNP economist Richard Marsh about the apparently dire consequences to people’s pensions, mortgages and savings if Scotland used Sterling after separating from the UK ("Tories claim SNP is in ‘full retreat’ over currency plan", The Herald, May 2). If they are both correct, this has worrying implications for all of us, young and old, which cannot be swept under the carpet by bland assurances from Nicola Sturgeon that Scotland would have “the currency that best suited the economy" ("Sturgeon insists concerns will be addressed before pound is ditched", The Herald, May 2).

As we may be subjected to Indyref2 if she gets her wish, and remembering her belief that independence transcends all other considerations, it would do us all a great service if Professor MacDonald and/ or Mr Marsh could put some flesh on their concerns by giving a few examples of the likely adverse effect on specific values of pensions , mortgages and savings so that we are fully informed.

Alan Fitzpatrick,

10 Solomon’s View, Dunlop.

IT is a most curious turn of events to find that someone who has so often stood in the Commons as the angriest man in Scotland, ranting about the UK Government and all that it stands for, now suddenly proposes himself as the custodian of all that is good at Westminster ("Wishart talks up bid to win support as next Speaker", The Herald, May 2).

As least Pete Wishart can claim to have momentarily united the two sides of the Scottish independence debate as all look on with incredulity at this weirdest example of political ambition.

Keith Howell,

White Moss, West Linton, Peeblesshire.