Currency Economics of Independence

“Of course there will be a currency union” Says senior UK Government Minister

Herald Front page follows up on Guardian story

Herald front page follow up on Guardian story

“Of course there will be a currency union” Says senior UK Government Minister.

Yesterday The Guardian broke the most important story in the campaign so far, a story that was bound to leak out at some point. The comments were today described by a leading Tory commentator as the greatest act of political stupidity for decades.

We now know the currency union will be continued “to ensure fiscal and economic stability on both sides of the border”

The senior government source is also quoted as saying “Of course there would be a currency union.”

The Guardian goes on to report “Westminster’s emphatic rejection was taken on the specific advice of the former chancellor and Better Together chief, Alistair Darling, and the main Downing Street Scottish adviser, Andrew Dunlop. The Treasury had assumed that Osborne would stick to his position of saying that a currency union would be highly unlikely.” Darling and Dunlop’s strategy looked in tatters before this latest revelation, now it is dead in the water.

The leading pollster and political science expert Professor John Curtice, wrote last week: “It has long been apparent that the currency intervention had not produced any boost for the no side. It is now beginning to look as though the last six weeks may, if anything, have seen the yes side catch up a little further.”

Professor Curtice’s remarks now look like an understatement.

Professor Leslie Young, Beijing

Professor Leslie Young, Beijing

Stinging Economic Criticism

Last week one of the world’s leading economists savaged the No Campaign’s rationale for claiming to reject the currency union. Professor Leslie Young of the Cheung Kong Graduate School of Business in Beijing said the UK Government was relying on a “lurid collage of fact, conjecture and fantasy” in making its argument. He went on to say: “The evidence cited by Permanent Secretary to the Treasury Sir Nicholas MacPherson used by the UK government to justify its decision on a currency union is fundamentally flawed”.

It’s Scotland Currency

The strength and reputation of Sterling has been built up over generations, supported by Scottish exports, manufacturing and heavy engineering in the past and now by oil and food and drink exports.

The over-performance of the Scottish economy in terms of tax per head has arguably maintained Sterling’s credibility at key moments in British economic history. Business for Scotland research has proven the people of Scotland have subsidised debt generated in the rest of the UK to around £72 thousand million pounds and rising.

Sterling is not only an asset that belongs to Scotland as much as to anyone in any other part of the UK. The Bank of England was nationalised in the 1940s and it holds a third of UK debt.

Without Scotland’s contribution to the strength of Sterling since the 1970s the currency would have been in trouble long ago.

To attempt to justify the denial of the right of the Scottish people to a share in the assets of the UK, Westminster would have to argue that Scotland had no part in building the value of those assets. An independent Scottish currency could be made to work for Scotland, indeed that would have many benefits however it could not be made to work so well for our friends and partners in the rest of the UK. If Scotland were to launch its own currency then the independence negotiations would have to include a deal on compensation for all the investment that Scotland has made in building up the currency.

Moreover, its not just about economics. The descendants and relatives of the hundreds of thousands of Scots who fought, and all too often died, in two world wars have a right to the assets of the country built and defended. There is a moral dimension in all of this too.

The very idea that the people of Scotland don’t have the right to access their own currency demonstrates graphically that Westminster does not have Scotland’s interests at heart.


Of course there will be a currency union. The genie is out of the bottle. Another scare story has run its course. This week is likely to be remembered as one of the most significant in the campaign for independence.

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About the author

Gordon MacIntyre-Kemp

Gordon MacIntyre-Kemp is the Founder and Chief Executive of Business for Scotland. Before becoming CEO of Business for Scotland Gordon ran a business strategy and social media, sales & marketing consultancy.

With a degree in business, marketing and economics, Gordon has worked as an economic development planning professional, and in marketing roles specialising in pricing modelling and promotional evaluation for global companies (including P&G).

Gordon benefits (not suffers) from dyslexia, and is a proponent of the emerging New Economics School. Gordon contributes articles to Business for Scotland, The National and Believe in Scotland.


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