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November 18, 2013 9:20 pm
From Mr Gordon MacIntyre-Kemp.
Sir, I noted with some surprise Martin Wolf’s article “Scots cannot ditch England and keep its central bank” (Comment, November 8).
Separation isn’t on the ballot paper. Unions and structures that work will remain after a Yes vote in Scotland, including the Union of the Crowns, the defence union through Nato, continued EU membership, a common market, common financial regulation and, of course, the social union of friendships and family ties.
The Bank of “England” is a misnomer; it is the central bank of the UK. Sterling is a jointly held asset of which Scotland owns a share.
Over the past 32 years, Scotland paid £64bn in interest servicing the UK’s national debt accumulated exclusively by the rest of the UK, without which Scotland would have generated a cumulative surplus (at a conservative 4 per cent interest) of £50bn. Despite this, the Scottish government proposes to assume a population share of UK debt in the interests of future partnership. Ipso facto, Scotland must assume a population share of assets.
Scottish exports are pivotal to sterling’s balance of payments. The rest of the UK has a trade deficit, Scotland does not. Likewise, Scotland is the rest of the UK’s second-largest trading partner, its exports to Scotland support up to 700,000 jobs in England alone – trade barriers anyone?
The Treasury and its political masters are simply scaremongering by disingenuously comparing the sterling currency union to the eurozone. Mr Wolf has presented only one side of the independence argument. In Scotland, that perspective is being defeated convincingly in debate after debate.
Pre-referendum politicking is one thing but, following a Yes vote, the goal will be mutual economic gain.
Given Westminster’s lamentable fiscal record, Scotland will insist on prudent fiscal parameters. A central bank and common financial services regulation make sense but fiscal levers controlled solely from London do not.
Of the (Scottish) commercial banks Mr Wolf referred to, HBOS was administratively based in Halifax and RBS experienced 80 per cent of its peak losses in London. The banking bailouts were also international in nature, including £285bn for RBS and £552.32bn for Barclays from the American Federal Reserve. Cash was based on location of contagion, not headquarters postcode.
Finally, the independent Scottish Fiscal Commission Working Group of leading international economists, including two Nobel laureates, has produced a practical framework for continuing the currency union, following technical work with the Bank of England. We know it can and will work because some of the best minds in the field tell us so.
The currency union’s reform will ensure the central bank sets policy not in the short-term interests of the City of London but for sustainable long-term benefit throughout Britain. This will help address the geographic and sectoral imbalances in Britain’s economy. A Yes vote will lead to a much needed restructuring of the British economic and political model. When the people of Scotland vote Yes next year, all the nations and regions of these isles will benefit.
Gordon MacIntyre-Kemp, Chief Executive, Business for Scotland
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