BoE governor leaves Salmond’s currency union in tatters

Bank of England governor Mark Carney has delivered a hammer blow to SNP plans for a currency union should Scotland vote for separation. Speaking today in Edinburgh, Mr Carney stressed that such a successful monetary union with the rest of the UK would “require some ceding of national sovereignty”. This would mean surrendering controls over fiscal policy, such as tax and spending rates, contradicting Alex Salmond’s claims in his White Paper that an independent Scotland would have “full autonomy”.

Mr Carney added that, even with a currency union, the creation of a border between a separate Scotland and the rest of the UK “can influence trade flows, even between otherwise highly integrated economies”. As it stands, 70 per cent of Scottish exports go to the rest of the UK, while Scotland receives 74 per cent of its imports from England, Wales and Northern Ireland.

Scottish Conservative leader Ruth Davidson MSP said: “When it comes to sharing the pound Alex Salmond has repeatedly claimed a separate Scotland could have its cake and eat it. That under independence, the country could have a currency union with the rest of the UK but still have total fiscal control over tax and spending. Now, the governor of the Bank of England has blown this assertion right out of the water, leaving Alex Salmond’s currency plans in tatters.

“He concludes that one of the main lessons to draw from the Eurozone crisis is that to have a durable, successful currency union requires some ceding of national sovereignty. Alex Salmond’s kneejerk reaction when he hears something he doesn’t like is to simply dismiss it out of hand, but he cannot ignore the views of the governor of the Bank of England.

“This is a crushing blow for the SNP’s plans to keep the pound, making it even more incredible that they haven’t come up with a currency plan B. Even senior figures within the Yes campaign don’t think a currency union would be possible under independence. Alex Salmond is becoming more and more isolated on this key issue by the day. 

“Mr Carney also made it clear in his speech today that in the event of a currency union, the creation of a border between a separate Scotland and the rest of the UK could influence the flow of trade. Given the vast majority of Scotland’s trade is within the UK, this is the one of the clearest signals yet that if we allow the SNP to create a barrier with the rest of the nations in the UK it would severely impact Scotland’s economy.”