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  By G.A.Ponsonby

Threats by the UK Government to block a currency union with a newly independent Scotland are either confused logic and inadequate economics, or a subterfuge to frighten Scottish citizens into voting No, an academic has said.

According to Professor Leslie Young, of the Cheung Kong Graduate School of Business in Beijing, if a Westminster Government blocked a currency agreement such a move would damage the economy in the rest of the UK.

In his latest analysis of post-independence currency options, Professor Young says a currency union is the best option for both governments in the event of a Yes vote.

Explaining his reasoning, the academic added: "[A currency union] offers microeconomic advantages to both economies that are likely to outweigh any macroeconomic advantages from the other currency options; it better insulates both economies from international disturbances; and it minimizes the massive legal issues that both economies would face immediately if Scotland switched to a new currency."

However he was scathing of claims by the Westminster Government that it would block any currency agreement.

He wrote: "The analysis of this paper thus leaves only two explanations for this stance by the UK Government, which has shaped the current debate on Scotland's currency: either confused logic and inadequate economics, or a subterfuge to frighten Scottish citizens to vote against independence by raising the spectre of economic chaos immediately afterwards."

The report also said that although costs to businesses could be substantial that these could be minimised through cooperation between both governments.

"The resulting costs are difficult to forecast because independence would transform the economic, political and administrative framework of business.  However, the costs could be minimized by prudent policies by the Scottish Government and rational cooperation between the two governments acting in the long-term interests of their citizens."

Professor Young was equally scathing of comments from Scottish Secretary Alistair Carmichael who recently said:

"The UK government has listened to the views of the Governor of the Bank of England and the independent advice of the Permanent Secretary to the Treasury that a currency [union] would be damaging for all the United Kingdom… That's why a currency union simply will not happen."

The Lib Dem MP made the statement in response to revelations by the Guardian newspaper that a senior coalition minister had admitted there would indeed be a currency union, and that threats to block an agreement were mere campaign tactics.

Responding, Professor Young commented: "In the land of David Hume, it would be a tragedy - and a farce - if the constitutional debate on Scottish independence were misled by the logical confusion in the Scottish Secretary's response, which was repeated in statements by Chancellor George Osborne and Treasury Chief Secretary Danny Alexander and which, indeed, vitiated the cited 'independent advice' by the Permanent Secretary to the Treasury."

The academic's conclusion followed analysis carried out on behalf of entrepreneur Sir Tom Hunter as part of the businessman's attempt to bring clarity and information to the independence debate.

Commenting on the analysis, Sir Tom who established Scotlandseptember18.com to provide definitive analysis on the key issues in relation to the vote in order to inform debate noted;

"Professor Young's analysis on this one narrow line of inquiry highlights the status quo as the best option for business. A currency union or any other form of currency solution should Scotland vote for independence creates uncertainty, risk and risk creates cost for business. This can and will impact upon capital deployment decisions going forward.

"However the currency question is only one aspect to our ability in business to take the right decision on independence and Professor Young has highlighted some downsides, what we now need to understand are the upsides so we can appropriately assess risk and reward.

"He also highlights precisely why both for Scotland and rUK that in the event of a vote for independence a currency union is by far the best option. Given the political manoeuvring around this subject I think he underscores the point that the independence vote is way too important to be left to the politicians alone...

"To be 100% clear Professor Young's paper highlights some serious issues for all concerned and we remain committed to continuing to analyse the myriad issues that all add up to taking a decision based on facts, evidence and greater granularity of data to make as informed a decision we possibly can come the 18th of September, as of now I personally remain resolutely undecided."

Comments  

 
# Online Editor 2014-04-30 22:54
Readers may have noticed Bella Caledonia and Wings Over Scotland were previewed on last night's Newsnight Scotland. Although we ourselves were not included, we have, for several weeks, been pressing the BBC to end its practice of previewing and reviewing only pro-Union news outlets across its platform on weekdays.

We announced several days ago (via twitter) that our lawyers were drawing up a letter requesting an end to the practice and for our inclusion. We will monitor BBC Scotland output across radio, TV and online to ensure balance is achieved.

We would also expect the first and currently only daily news outlet (ourselves) that operates a pro-independence editorial line to feature regularly in these reviews and previews.
 
 
# Breeks 2014-05-01 06:36
I think all three of you are the perfect compliment to each other. Some people don't 'get' the subtle differences between you, but I like to think I do. I might call you three prongs on the same trident, except that wouldn't be fair to the whole host of other websites and blogs taking the fight to the heart of Better Together, the BBC.
Individually, you all hit hard and leave little room for any comebacks. Together, you are formidable. Thank you.
 
 
# gus1940 2014-05-01 06:40
I was pleasantly surprised with this development although the blatant anti Independence onslaught continues on the main news bulletins as can be seen with their continued ludicrous assault on Eck this morning over his Putin remarks.

I see last night's development as further evidence of my theory that in an attempt to thwart accusations of bias they have allowed the liitle-viewed Newsnight to ease off on bias while continuing in full bias mode on all the news bulletins which most viewers watch.
 
 
# bringiton 2014-05-01 11:12
I suppose that Newsnet Scotland sounds too much like Newsnight Scotland which may be why there was no mention.
Worlds apart in terms of content and direction.
Newsnet will be even more important after independence because of the need to scrutinise the activities of the Scottish government in implementing the democratic will of the people.
The internet is the now and future of news media and I see a great future for Newsnet.
 
 
# africraig 2014-05-01 11:25
Yes, I hope that Newsnet also gets featured as it is a very well produced, articulate and well researched.
 
 
# YESGUY 2014-05-01 20:33
Quoting africraig:
Yes, I hope that Newsnet also gets featured as it is a very well produced, articulate and well researched.

ditto
thank you all at newsnet
 
 
# Ready to Start 2014-05-01 07:13
It would be worthwhile finding out the "deadline" for Newsnight and BBC/ SKY paper reviews as, with due respect to Wings, the above story is far more relevant to a political programme than a football international but then BBC couldn't have a counter balance to the continual vilification of Alex Salmond in the Scotsman and Herald.
The London Parties and their media allies are milking the Ukrainian remarks for all their worth. The No campaign must know they are losing.
Wear your YES badge with pride this weekend and through the weeks to come.
 
 
# UpSpake 2014-05-01 09:11
The Professor's intervention on this divisive issue is more than welcome. London and the Bank of England to a lesser extent are pre-negotiating and it is folly in the extreme for the Scottish Government to declare its hand at such an early stage.
However, the rhetoric has at least released one genie out of the bottle and that is that the debt acrued by London/Westminster is truly their debt and not proportionatly Scotland's. However as they rack up debt, they duly expect the subservient Scots to pay their share even if they receive no benefit from whatever the funds are spent on, usually London based infrastructure.
Odd maneouvers within the Treasury also result in Scotland taking on a burden which is neither consulted nor agreed but simply applied.
When the Scots Exchequer is free'd up from all this liability and we look towards future levels of taxation to be placed upon the Scots population we see a less obtrusive tax take which is encouraging.
 
 
# Flower of Scotland 2014-05-01 09:31
I ditched mainstream newspapers and news Channels ages ago! You are my newspapers Newsnet, Wings and Bella. I pop in and out all day. It takes longer these days as there are more comments than ever! Keep up the good work and THANKS for all your hard work!
 
 
# Gaelstorm 2014-05-01 10:28
And yet again no mention of a positive story on the MSM.
 
 
# Dundonian West 2014-05-01 12:09
A Mike Small in a site named Bella Caledonia has a few things to say about the state of journalism in this country.
"The question journalists should be asking themselves is why is the No campaign dominated by political parties and without a credible campaign on the ground anywhere?
What has caused the spontaneous creation of dozens of pro-indy groups and the biggest revival of political activity in decades?
Why does this seem such a threat to democracy?

For the politically illiterate journalists out there: it’s called a movement." [!]
Yes----well said.
bellacaledonia.org.uk/.../...
 
 
# Breeks 2014-05-01 14:54
What I have noted is Unionists commenting on Scotland's alleged default on debt as if it was a tit for tat response to obstructing a currency union, - witness all the speculation on how to define the value of Sterling as an asset.
It is my understanding there is no equitable balance between Scotland's 'share' of UK debt and the 'value' of Sterling.
From the outset, it has always been my understanding that denying Scotland a currency union was a denial of Scotland's rightful share of an asset. It was that principle, not the actual detail, whereby if Scotland was denied it's rightful share of UK assets, then it would be under no obligation to share any of the UK debt.
Just like Unionists square away Nuclear Subs on the Clyde against a currency union agreement, or currency union offset against debt. This is all contrived speculation.

The only principle here is a dispute over assets may cause a reciprocal dispute over our share of debt.
 

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