New Economic Report Exposes Failings of UK Treasury Stance on Monetary Union as Support for Scottish Independence Increases

United Kingdom opposition to a monetary union with an independent Scotland was  thrown into confusion today. In a withering attack on the United Kingdom’s Chancellor, George Osborne’s stance that he would block any such monetary union a report has described the English anti-Scottish independence MP Osborne of basing his assertions on  “a lurid collage of fact, conjecture and fantasy”. This report comes from Professor Leslie Young, of the Cheung Kong Graduate School of Business in Beijing.

It forms part of a study commissioned by entrepreneur Sir Tom Hunter who is funding various reports to help Scottish voters better understand the issues before the forthcoming referendum on Scotland’s independence. The resulting academic paper from Leslie Young is a strong attack on the advice from the UK Treasury for opposition to monetary union between an Independent Scotland and the United Kingdom. Professor Young described the treasury position as not standing up to scrutiny. He argues that the treasury has not made it clear why it would not be in the best interests of the United kingdom for an independent Scotland to be part of a monetary union.

Osborne cited a memo by Sir Nick Macpherson, Treasury official, stating he would not recommend a Westminster Government enter into monetary union with Scotland. Professor Young, in scrutinising the treasury letter, found that it contained no good reasons to reject a monetary union. The research also attacks parallels drawn by Nick Macpherson between the crisis in Eurozone countries and the differences between Germany and Greece. Professor Young questioned claims that banks in an independent Scotland would pose a risk to the United kingdom.

Professor Young says: "The Treasury claims are invalidated, not by errors of fact, but by errors of logic. These errors are subtle and difficult to disentangle. But only subtle logical error could have led the Treasury to claim, in effect, that past risky behaviour by investment bankers in London, inadequately supervised by the Bank of England, somehow disqualifies an independent Scotland to be a currency union partner of England.

"There may be good reasons for the UK to reject a currency union with an independent Scotland, but none can be found in the Treasury letter. Yet, that letter is the key justification for the stance of the UK Government."

The Scottish Government welcomed Professor Young’s report. A spokesperson for Scotland’s First Minister Alex Salmond, said that the anti Scottish independence alliance of Conservative and Labour "has been losing the political argument - now they're losing the fiscal argument too," . This comes on the back of new polls published in The Scotsman newspaper on 23rd March 2014 that show an increase in support for a Yes vote and that Scotland’s voters are becoming increasingly sceptical that voting No would deliver them the increase in powers that they really want.

Supporters of Scottish independence have long derided the negative and scare mongering tactics of anti-independence campaigners. It is clear that a currency union between an independent Scotland and the United kingdom makes sense. So in the end, when all of the attempts to frighten Scotland’s voters have failed and a Yes vote is achieved in September’s referendum economic sense will prevail.