This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/uk-scotland-scotland-politics-26489307
The article has changed 3 times. There is an RSS feed of changes available.
Version 1 | Version 2 |
---|---|
Scottish independence: Citigroup says formal currency union 'unlikely' | Scottish independence: Citigroup says formal currency union 'unlikely' |
(about 2 hours later) | |
A deal on sharing control of the pound between an independent Scotland and the rest of the UK is "unlikely", analysts at the global bank Citigroup have said. | A deal on sharing control of the pound between an independent Scotland and the rest of the UK is "unlikely", analysts at the global bank Citigroup have said. |
They also said it was "astonishing" the Scottish government did not have a currency union alternative. | They also said it was "astonishing" the Scottish government did not have a currency union alternative. |
The three main Westminster parties have ruled out a formal monetary union in the event of a referendum "Yes" vote. | The three main Westminster parties have ruled out a formal monetary union in the event of a referendum "Yes" vote. |
The Scottish government said the pound was "as much Scotland's as it is the rest of the UK's". | |
Citi's report on the implications of a vote for independence came as Chief Secretary to the Treasury Danny Alexander said the cross-party decision to rule out a monetary union was "final". | Citi's report on the implications of a vote for independence came as Chief Secretary to the Treasury Danny Alexander said the cross-party decision to rule out a monetary union was "final". |
Mr Alexander, along with UK Chancellor George Osborne and Labour shadow chancellor Ed Balls, have said they could not support a formal currency union between Scotland and the rest of the UK in the event of a "Yes" vote in the 18 September referendum. | Mr Alexander, along with UK Chancellor George Osborne and Labour shadow chancellor Ed Balls, have said they could not support a formal currency union between Scotland and the rest of the UK in the event of a "Yes" vote in the 18 September referendum. |
Scottish Finance Secretary John Swinney said UK ministers were essentially arguing to take responsibility for all UK debt. | Scottish Finance Secretary John Swinney said UK ministers were essentially arguing to take responsibility for all UK debt. |
The Citigroup report said there was "nothing inherently implausible about a country with Scotland's population and economy being independent", but raised concerns that: | The Citigroup report said there was "nothing inherently implausible about a country with Scotland's population and economy being independent", but raised concerns that: |
It said: "We regard a sterling monetary union as unlikely, but we are genuinely unsure what currency amd monetary policy would be adopted by an independent Scotland. | It said: "We regard a sterling monetary union as unlikely, but we are genuinely unsure what currency amd monetary policy would be adopted by an independent Scotland. |
"In our view, it is astonishing that the Scottish government, in seeking independence, has reached this stage: seeking a currency union without agreement with the rest of the UK and without a clear alternative plan. | "In our view, it is astonishing that the Scottish government, in seeking independence, has reached this stage: seeking a currency union without agreement with the rest of the UK and without a clear alternative plan. |
"The painful euro area strains make it clear that the set-up for the currency and monetary policy is crucial: it cannot be ignored or assumed to 'be alright on the night'." | "The painful euro area strains make it clear that the set-up for the currency and monetary policy is crucial: it cannot be ignored or assumed to 'be alright on the night'." |
The report also argued that a deal on sharing control of the pound between Edinburgh and London would "most likely require severe constraints on the fiscal policy of an independent Scotland". | The report also argued that a deal on sharing control of the pound between Edinburgh and London would "most likely require severe constraints on the fiscal policy of an independent Scotland". |
Government 'threat' | Government 'threat' |
And Citi analysts estimated the borrowing rate for an independent Scottish government would be around one-and-a-quarter percentage points higher than the UK level, although it could be more initially. | And Citi analysts estimated the borrowing rate for an independent Scottish government would be around one-and-a-quarter percentage points higher than the UK level, although it could be more initially. |
The researchers also said they did not regard the Scottish government's "threat" to walk away from Scotland's share of the UK national debt as being "wholly a bluff". | The researchers also said they did not regard the Scottish government's "threat" to walk away from Scotland's share of the UK national debt as being "wholly a bluff". |
They said that while such a move "would probably cause a new Scottish government to acquire a default premium on future borrowing" it would also "cut Scotland's fiscal deficit by about 3% of GDP", bringing the deficit "below the UK level and give Scotland a low or zero initial debt ratio". | They said that while such a move "would probably cause a new Scottish government to acquire a default premium on future borrowing" it would also "cut Scotland's fiscal deficit by about 3% of GDP", bringing the deficit "below the UK level and give Scotland a low or zero initial debt ratio". |
Responding to the bank's report, the Scottish government said a currency union was in the "overwhelming economic interest" of the UK. | |
A spokesman said: "As leading international credit rating agency Standard & Poor's last week concluded, Scotland's wealth levels 'are comparable' to those of AAA-listed nations, and that as an independent country - even without North Sea oil - Scotland would qualify for S&P's 'highest economic assessment'. | |
"The Fiscal Commission Working Group, which comprises economic experts including two Nobel Laureates, has already considered a range of currency options in its detailed report published a year ago, and concluded that it is in the interests of both Scotland and the UK to continue to retain Sterling in a formal monetary union, and that is the policy the Scottish government proposes. | |
"The pound is as much Scotland's as it is the rest of the UK's, and the Scottish government has put forward sensible proposals for a formal monetary union that would ensure both governments had full flexibility over their fiscal policies such as taxation, within an overall sustainable framework. | |
"A currency union is in the UK's overwhelming economic interests, including the vast contribution of Scottish oil and gas to the UK's exports." | |
Pensions industry | |
Meanwhile, Mr Alexander used a speech to representatives of the pensions industry to again call on the Scottish government to come up with a currency Plan B, insisting his position was not a campaign tactic. | Meanwhile, Mr Alexander used a speech to representatives of the pensions industry to again call on the Scottish government to come up with a currency Plan B, insisting his position was not a campaign tactic. |
He told the National Association of Pension Funds conference: "I've seen some people suggest we are not serious about refusing a currency union. | He told the National Association of Pension Funds conference: "I've seen some people suggest we are not serious about refusing a currency union. |
"Let's call this the John McEnroe defence. Except in this instance it's not just one person they're shouting at, but three. | "Let's call this the John McEnroe defence. Except in this instance it's not just one person they're shouting at, but three. |
"And our decision - taken in the best interests of Scotland and the rest of the UK - is final. | "And our decision - taken in the best interests of Scotland and the rest of the UK - is final. |
"No ifs, no buts. No matter how much of a racket they make, it isn't going to change." | "No ifs, no buts. No matter how much of a racket they make, it isn't going to change." |
This week, the Scottish government's fiscal commission working group, chaired by economist Crawford Beveridge, reiterated its view that a formal currency union was the best option for an independent Scotland, saying it had "clear advantages for the rest of the UK". | This week, the Scottish government's fiscal commission working group, chaired by economist Crawford Beveridge, reiterated its view that a formal currency union was the best option for an independent Scotland, saying it had "clear advantages for the rest of the UK". |
Mr Alexander said his position had been backed by advice from the Treasury's most senior civil servant, Sir Nicholas Macpherson, who said a currency union would be "fraught with difficulty". | Mr Alexander said his position had been backed by advice from the Treasury's most senior civil servant, Sir Nicholas Macpherson, who said a currency union would be "fraught with difficulty". |