Scottish independence: SNP would concede powers to win currency union

John Swinney, Scottish finance secretary, has conceded that an independent Scotland “would have to accept some fiscal constraints” in its desire to agree a currency union with the rest of the UK if the country votes for independence next week.

Although the three main Westminster political parties and Bank of England governor Mark Carney have all emphatically ruled out a formal currency union, Mr Swinney said he was “very confident” that an agreement could be hammered out if Scots voted for independence.

Noting Wednesday’s “rushed” visit of the three party leaders to Scotland as some opinion polls showed a lead for the Yes campaign, he told the BBC’s Today programme on Thursday that a vote in favour of independence would strengthen Scotland’s powers to negotiate an agreement.

“If we get a Yes vote, what we will have is an emphatic mandate to see that currency union is secured on behalf of the people of Scotland,” he said, condemning the unionist parties for refusing to take part in a “reasoned discussion” over sharing the pound.

Mr Swinney said he was not deterred by Mr Carney’s comments on Tuesday that a currency union would be “incompatible with sovereignty”.

“I accept that an independent Scotland would, in a currency union, have to accept some fiscal constraints. We would have to share banking regulation . . . that’s how currency union would work,” he said.

“The advantage of currency union for the rest of the UK as well as an independent Scotland is . . . trying to avoid the obstacle of higher transaction costs to trade and business activity.”

The currency question has become the central issue of the independence debate. The uncertainty has prompted leading Scottish companies – including Royal Bank of Scotland, Lloyds Bank and Standard Life – to prepare contingency plans to shift their headquarters to England in the event that Scots vote for independence, and prompted investors and savers to move cash south of the border.

SNP leaders have previously stressed that they are comfortable with pulling sovereignty when it comes to monetary policy and the overall fiscal framework, arguing that this would still leave Scotland with control over tax policy.

In depth

Scottish Independence

Scotland will decide in a referendum to be held on September 18 2014 whether or not to end the 307-year-old union with England

Further reading

On Thursday, retailers including John Lewis and Next both warned that shoppers in an independent Scotland could face higher prices.

Lord Wolfson, chief executive, said that while Next would continue to trade in Scotland whatever the outcome of the vote, he was concerned about the impact on the wider economy.

“If their currency is a weaker one, potentially it is going to put prices up,” he said.

John Walden, chief executive of Argos and Homebase owner Home Retail Group, said: “We obviously do a lot of business in Scotland – certainly we’re looking with interest at the results. Really, it’s hard to know what to anticipate – whether there’ll be increased costs or what we will have to accommodate.”

Mr Swinney responded: “This argument is one that is firmly contested by other retailers.”

Additional reporting by Andy Sharman and Mure Dickie