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Doubts over currency plan

SNP’s blueprint ‘would cause crippling uncertainty’

Robert Kilgour

Robert Kilgour: a country’s success is based on its institutions and the policies its follows (photo: Terry Murden)


A business group opposed to Scottish independence says the proposals in the Sustainable Growth Commission report would plunge the country into a period of “crippling uncertainty”.

Scottish Business UK takes particular issue with the plan to retain the use of sterling without controlling the currency and disputes the central claim that small nations perform better than large ones.

Entrepreneur Robert Kilgour, founder of SBUK, said: “As before, the case for independence uses selective data and logical contortions to come up with imaginary benefits.

“For example, there is no real correlation between the size of a state and its economic performance. A country’s success is based on its institutions and the policies its follows.

Most Scots would question the honesty of any study that tried to claim simultaneously that Brexit is economically damaging but Scottish independence somehow isn’t. 

“The powers are already there if politicians have the desire and focus to use them. It’s just a question of priorities – arguing about independence is one thing, helping real people and real businesses is quite another.”

SBUK says the plans would lead to higher borrowing costs once the pound sterling is finally abandoned and higher taxes – or spending cuts – to close the spending deficit that an independent Scotland would have.

SBUK’s chief executive – former Tory MEP Struan Stevenson – said: “This report at least has the honesty to admit the very profound problems that independence would cause business in Scotland but it makes you wonder what on earth the point of it all is. 

“Leaving the UK means higher borrowing costs both before and after the pound sterling is finally abandoned, higher mortgage rates and, eventually, a falling currency. Yet the plans to transition to a new currency over 10 years or more is the worst of both worlds. It would leave Scottish businesses in limbo, unable to plan for more than the short term.

Mr Stevenson , who is also campaigning to halt the Brexit process, added: Breaking away from the UK also means we’d need to close a massive fiscal gap with either big tax increases or spending cuts or both. All of this means jobs lost and higher costs for business.

“Some businesses in sectors such as finance and engineering would be very badly hit and may need to relocate down south

We trade four times as much with the rest of the UK as with the EU, so leaving the UK single market would make Brexit look like a picnic in the park.

“The truth is that Scottish business benefits tremendously from our place in the UK. It gives us a stable currency and strong finances. Best of all it allows unfettered access to where most of our customers are – the rest of the UK.

“Breaking away from that would be folly of the first order and is quite unnecessary. Most of the measures needed to reform the economy – including some of those suggested in this report – can already be achieved within the UK by the Scottish Parliament with its devolved powers.”

Party reaction

Scottish Conservative Party leader Ruth Davidson questioned the growth forecasts in the Commission’s report.

“Today’s paper claims that an independent Scotland would start life with a deficit of 5.9% – and proposes reducing this to 2.6% within ten years,” she said.

“Even using these figures – which the Scottish Conservatives do not accept are accurate – this would require savings equivalent of £27.1 billion over ten years to Scottish public services.”

Scottish Labour has branded the blueprint a ‘cuts commission’ and takes issue with the proposal for Scotland outside the UK to retain sterling – known as ‘sterlingisation’. Labour says this would leave Scotland with no control over monetary policy.

The commission also recommends a 5-10 year period of deficit reduction, aiming to get Scotland’s deficit to under 3% from the current 8.3%.

This, says Labour, would lead to a prolonged period of austerity with public spending slashed.

Richard Leonard at Penicuik

Richard Leonard: ‘this is a cuts commission’ (photo by Terry Murden)


Scottish Labour leader Richard Leonard said “This was branded the growth commission, but it’s really a cuts commission.

“Proposals to cut Scotland’s deficit by almost two thirds over a decade would result in a level of austerity that not even George Osborne attempted.

“On currency, the SNP has outlined a plan which would mean Scotland has less independence, not more.

“A separate Scotland outside of the UK seeking to use the pound is a recipe for instability and is the economics of dereliction. We would give up our say over interest rate policy, exchange rate policy and inflation.”

Scottish Labour for the Single Market co-chairman Ian Murray said: “This is a blueprint for economic risk that Scotland does not need or want.

“We are already facing an economic crisis as a result of Theresa May’s hard Brexit, which could lead to tens of thousands of job losses.

“Two catastrophic wrongs don’t make a right. Scotland deserves better than two nationalist parties fighting to see who can do the most economic harm.”

Scottish Liberal Democrat leader Willie Rennie said: “The SNP’s economic case for independence and their currency plans have been repackaged but not much has really changed since they were rejected in 2014.

“We should not be compounding the chaos of Brexit with the chaos of independence. Scotland should not jump from the frying pan into the fire.”

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