The Scottish separatists neither understand nor care about Scottish business

by Gordon Banks

Yesterday’s intervention by the chancellor is a defining moment in what has become the key issue of the debate surrounding Scottish independence.

George Osborne dealt a serious blow to the SNP by effectively ruling out any possibility of a currency union between an independent Scotland and the rest of the UK.

His comments, which were echoed by both the shadow chancellor and the chief secretary of the Treasury, have confirmed that a vote for independence would be a vote for Scotland losing the pound.

The chancellor’s comments have also had another important consequence, one which has perhaps been overlooked in the analysis of his speech, and that is to bring attention to the debate about the impact of currency on Scottish business.

We already know that currency is one of the most important issues Scottish businesses consider when approaching the independence debate. This is a fact which has been repeated on a number of occasions, most recently by Liz Cameron of the influential Scottish Chambers of Commerce.

The reasons for this are clear. The UK stands as Scotland’s dominant export market by a wide margin and any change to the current currency arrangements would have a significant impact on trade, productivity and growth.

The loss of the pound would also raise serious questions not only about the cost on business of transition to a new currency, but about transaction costs and price competitiveness with the rest of the UK. This is not compatible with the need of stability that business in Scotland is calling for as we head out of the recent economic challenges we have all faced.

If there is one thing I have learned, not only as an MP, but from my time running a small business – it is that businesses require stability to prosper.

Stability is a key component of sustainable growth and provides businesses with the basis that they need to invest and innovate.

Unfortunately, stability is the one thing that has been entirely missing from the SNPs currency plans to this point. By saying that he would keep the pound in an independent Scotland, Alex Salmond was promising something that was not in his gift to guarantee.

The consequences of this are now clear. We stand only seven months from the referendum, but are no closer to knowing what currency would be used in an independent Scotland, but we know what it will not be if Scotland votes yes in September.

And business cannot accept the juvenile threats emanating from the YES campaign that they would default on their portion of debt if they don’t get their way. This would make Scotland a laughing stock in the developed world and would result in higher borrowing costs for the government and for businesses. This would place jobs , growth and investment at serious risk and disadvantage us even more from our nearest neighbour who would become our largest competitor.

The options open to the separatists are either joining the Euro, floating a separate currency or using the £ or indeed any other currency without a formal agreement.

These are all options which carry risk from significant to massive on the Richter scale and none of them are designed in a way that will give Scottish business the certainty or stability it needs.

Businesses in Scotland which export £47 billion of goods each year to the rest of the UK need answers to all of these questions, and a clear and credible alternative to the currency position as it has evolved this week if the Yes campaign have any chance of being taken seriously on the fundamental issue of currency.

An independent Scotland would very soon become another international trade competitor in the rUK market and as such would be more vulnerable in its trade south of the  border than it is today.

As well as certainty and stability Scottish businesses want and need the best option.  It is clear both in historical and current times that this means keeping Sterling.

The best way to achieve this basic need for business stability and to protect jobs, manage overheads and deliver investment and growth in Scottish business is to vote to keep the pound by voting no in September’s referendum.

Gordon Banks MP is MP for Ochil and South Perthsire, a shadow Scotland office minister and a former businessman

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8 Responses to “The Scottish separatists neither understand nor care about Scottish business”

  1. Tafia says:

    Although a rump UK can refuse a currency union with Scotland, it can’t actually stop them using sterling. Any country on earth can use any currency it feels like if it is traded on ther international money markets.

  2. David Walsh says:

    Recent utterances, like Cameron’s warning and the intervention of the Bank of England (and North of the border, that name resonates) to warn of the dangers of an independent Scotland have all conspired to hype the issue up – and in my humble opinion, to the benefit of Alex Salmond and the Yes camp.

    And no more so than last weeks simultaneous declaration by Osborne, Ed Balls and Danny Alexander that the Scots ‘cannot use;the pound if they vote for independence.

    Quite how such an edict can be enforced is pretty difficult to fathom, but what would not be hard to fathom – even for the thickest Braveheart woad wearing nationalist – is the obvious conclusion that this joint approach had been cooked up through what are delicately called ‘the usual channels’ – in other words a cosy arrangement reached within the confines of division bell London. If this produces anything, it is likely to be creation of a Caledonian version of the Dunkirk Spirit – ‘alright, alone then if need be’.

  3. Colin Moulder says:

    A very good article, with salient points that show business in Scotland would be in great peril because salmond knows Scots will not join the Euro and therefore he only has Sterling to fall back on.

    The other thing to consider is how many 16 year olds give a damn about arguments over currency or even understand it. To allow 16 year olds a vote is a shrewd motive by salmon.

  4. When it is the question of currency and business, I agree with the fact that Business do need Stability for functioning. In fact, businesses spend lots of money for buying peace. But what I fail to understand here how a new currency can’t offer stability? I’ll be obliged if Mr. Gordon Banks MP can enlighten me on that.

  5. uglyfatbloke says:

    Why should you expect that 16 year olds may or may not understand the arguments? Osborne and Alexander – and unfortunately Balls too – clearly do not understand the principles or the mechanics.
    If the Salmondistas are to be beaten there has to be a move away from the campaign policy of self inflicted wounds.

  6. swatantra says:

    You’d need a Diploma in Law to understand the constitutional intrincacies of this complex Union. Thankfully I’ve got a Diploma, but many people haven’t. So let’s just keep the way it has been for the last 300 years, but give the Scots a bit more autonomy to run their affairs. Surely the Country has more important things to think about than breaking up, or getting out of Europe.

  7. uglyfatbloke says:

    Good sense as usual Swatantra, though the Treaty of Union itself is surprisingly straightforward. what is difficult is what people want it to say. The wider practice of confusing the Treaty with the two Acts of Union does n’t help – in part because people assume (understandably in my view) that – as an Act – it can be altered and adjusted by Parliament.

  8. Independent countries that don’t control their own currencies are at a positive disadvantage compared to those, like the US or UK, that print their own fiat money.

    No matter how well the UK and the USA were managed, there is no way they would be able to run the deficits they do without the benefit of their own currencies.

    If, like Germany, Scotland had no deficits then everything would be fine for them. However, if they were like Italy and France with deficits in their trade balance it would be a disaster, either in the Sterling or Euro zones, if they had to rely on the market for the sale of their debt.

    Bond buyers know the UK and the USA can never involuntarily default on debt. Scotland could default unless they had their own currency. So they would be in the same position as Greece with very high interest costs on bond sales.

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