Financial Times

Scotland could abandon currency union with UK, says Alex Salmond

by Henry Mance and Political correspondent, Financial Times

March 17, 2017 | 10:43 am
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Scottish Nationalists are prepared to change their blueprint for independence and abandon previous proposals for a currency union with the rest of the UK, the former first minister Alex Salmond has said.

Mr Salmond – who led the unsuccessful 2014 campaign – also warned Theresa May that attempts to delay a second referendum until after Brexit will backfire and lead to a rise in support for independence.

In an interview with the FT, the former first minister confirmed that Scotland would seek to remain in the single market after a potential referendum in 2019, though it would have to leave the EU as part of the Brexit process.

That would enable independence campaigners to make the referendum a choice between “two uncertainties . . . Brexit Britain or Scotland in Europe”.

“Nicola Sturgeon will fight a very modern campaign. She’s learned a lot of lessons from 2014,” said Mr Salmond.

The battle over a second Scottish independence referendum began in earnest this week, with Mrs May rejecting Nicola Sturgeon’s call for a vote before spring 2019, saying that “now is not the time”.

Mr Salmond said that the referendum should be held at the same time Westminster votes on the Brexit deal: “That vote will have to take place before the end of March 2019.”

In a YouGov poll this week, 46 per cent of Scots said the UK government should agree to a second referendum, while 42 per cent disagreed. Poll averages give unionists a small lead, but bookmakers have an independence vote as odds-on if a vote is held.

Mr Salmond said it would be “impossible” for Mrs May to refuse a referendum if, as expected, the Scottish parliament votes in favour of requesting one next week.

In the last referendum, unionists portrayed independence as a risky scenario that could jeopardise pensions and public services. On the crucial currency question, Mr Salmond said he was open to changing his 2014 view that the best option was a currency union between Scotland and the remainder of the UK.

“You can’t do something which the other side could have a veto over,” he said. “If you look at the second debate I had with Alistair Darling [in 2014], you’ll see where the direction of travel is.”

Mr Salmond ruled out joining the euro, but suggested that Scotland could introduce a new currency, either freely floated or pegged to the pound, and perhaps use sterling without any say in monetary policy while the new currency is introduced.

SNP MPs expect Ms Sturgeon to clarify her plans by the autumn. She has appointed a growth commission, led by Andrew Wilson, a former MSP, to advise on the economics of independence, including the currency.

Unionists argue that Scotland would leave the EU regardless of any referendum, because an independence vote would take years to implement. But Mr Salmond said it could remain within the single market, while the rest of the UK left.

“The question of continuity that matters is continuity within the single marketplace, the European Economic Area,” he said. “Don’t underestimate the reservoir of goodwill that Scotland has now.”

Asked how this would disrupt trade between England and Scotland, he pointed out that Mrs May has already promised no hard border between Northern Ireland and Ireland. “It’s totally impossible to argue you can have a frictionless border on the Foyle but you can’t have one on the Tweed.”

Tax receipts from Scottish North Sea oil have plummeted, and are projected to be just £700m in 2018-19, down up to 93 per cent on Mr Salmond’s 2014 projections. Partly as a result, Scotland’s fiscal deficit widened to 9.5 per cent of GDP in 2015-16, double the rate of the rest of the UK, according to official figures.

Mr Salmond said that did not accurately reflect the balance sheet of an independent Scotland, because they included the costs of nuclear weapons and the HS2 railway. Scotland would also see higher growth, because of increased immigration, greater productivity and policy autonomy, he argued.

Mr Salmond has been one of the most impatient advocates of a second referendum, since resigning as SNP leader after the 2014 vote. In 2015 he suggested that a vote could be triggered by the UK renewing its Trident submarines.

“I didn’t know there was going to be a Brexit vote,” he said. “But what you do know is there’s going to be a divergent circumstance between the politics of Scotland and the politics of Westminister, and one of these circumstances would be such that it would require the matter to come to a head again.”

Asked whether unionists should blame David Cameron or Jeremy Corbyn for a second referendum, he instead placed responsibility on Theresa May for ignoring Ms Sturgeon’s offer not to hold a vote if Scotland could remain in the single market. “Undoubtedly she could have sidestepped this quite easily in the last three months . . . I think Cameron would have accepted [Ms Sturgeon’s offer], incidentally.”

Mr Salmond also blamed the prime minister for events in Northern Ireland, where unionists have lost their majority in the Stormont assembly. “Unlike Cameron, and Blair – God help me – and Major in particular, who all put a heavy shift into Northern Ireland, she’s allowed a Northern Irish impasse to develop. An active prime minister with an active Northern Irish secretary could have avoided this. And one of the things you might have thought of to avoid it would have been to say ah, this single market thing’s quite interesting.”

Ms Sturgeon’s speech on Monday caught Mrs May off guard at a Commonwealth Day summit. “I can’t tell you how caught in midship she was,” Mr Salmond said. “I’ve spoken to the person who she was with when she heard the news.” What was the prime minister’s reaction? “‘My goodness’ – that’s what I was told.”

Downing Street did not respond to a request for comment.

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by Henry Mance and Political correspondent, Financial Times

March 17, 2017 | 10:43 am
  |     |     |   Start Conversation

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