News Column

Scottish yes vote on independence could lead to currency limbo, say MPs

August 9, 2014

Patrick Wintour, theguardian.com



A yes vote for independence would break up the UK single market and in the short-term could leave Scottish businesses uncertain of their position in Europe, the all-party business select committee has said in a report.

A protracted Scottish negotiation over EU membership, and the uncertain investment environment arising from a vote in favour of independence, would involve "a leap of faith" and would have a damaging impact on businesses in Scotland as well as other parts of the UK, it says.

The legal advice surrounding an independent Scotland's place in Europe should be published, it adds.

The Labour leader, Ed Miliband, is due to give a speech to Scottish business leaders in Glasgow on Friday, where he will attack Alex Salmond's difficulties in explaining what he would do if an independent Scotland is deprived of access to the pound.

The committee raises serious concerns that a yes vote may leave Scotland facing a currency "limbo" and, in the short term, unable to join a sterling currency union and without the prospect of adopting the euro.

Adrian Bailey, chair of the committee, said: "On big questions, such as the issue of a future currency, it's time for the Scottish government to come clean and lay out the detail. It's no longer tenable for the Scottish government to assert an independent Scotland will retain the pound when a sterling currency union is firmly off the table.

"The Scottish government must play fair with Scottish businesses, investors, and voters and set out its plans for an alternative currency for an independent Scotland."

The report says: "Scotland would become a member of the European Union at some point in the future. It is a leap of faith to believe that this would either happen automatically or that re-admission would be a swift affair. There would be a period of intense and complex negotiation and the terms of those could be damaging to business and citizens.

"A protracted period of negotiation beyond the proposed 18 months would have a negative impact on business in Scotland as well as the other parts of the United Kingdom. There is a substantial risk that Scotland could be cut adrift in the short to medium term from its largest economic market. The impact of this on Scottish business would be significant."

Bailey added: "It is highly unlikely that the EU would permit a sterling zone. Furthermore, we do not believe that the use by a separate Scotland of a 'shadow pound' would be acceptable to the EU."

The committee says the Scottish government's stated intention to renationalise the Royal Mail upon achieving independence is an uncosted aspiration, bereft of any detail of how it is to be paid for or how it would be done.

It raises fears for the future of the universal postal obligation under which letters are delivered to any UK destination at a set price in an independent Scotland, with its continued survival likely to be secured only at significant additional cost, either to the taxpayer or to the consumer.

It also warns: "The current policy of charging tuition fees for non-domiciled UK students provides a significant source of income to Scottish universities. Despite the special circumstances highlighted by the Scottish government, it is highly doubtful that this policy will be compatible with EU membership. The Scottish government must therefore set out how it will replace the financial shortfall of not being able to levy tuition fees only on students from the rest of the United Kingdom."


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Guardian Web


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters