Nicola Sturgeon to outline plans for an independent ‘Scottish pound’

Sturgeon - Ken Jack/Getty Images
Sturgeon - Ken Jack/Getty Images

Nicola Sturgeon has said Scots would be asked to vote for independence without knowing when the pound would be dumped and with the Bank of England in charge of a separate Scotland’s interest rates.

The First Minister said there would be no “fixed timescale” for replacing sterling with a Scottish pound, meaning the Bank of England would continue to determine monetary policy and interest rates for a separate Scotland indefinitely.

Speaking ahead of the start of the SNP conference in Aberdeen on Saturday, she disclosed that the Scottish Government will publish an updated economic case for independence next week.

But this means that delegates at the conference will be unable to discuss her plans after previously voting that they wanted to move away from the pound as soon as possible.

The First Minister also ruled out cutting the £20 million of taxpayers’ money she has set aside for another separation referendum to increase support for people struggling in the cost of living crisis.

Her intervention comes ahead of her keynote speech at the conference on Monday. A Supreme Court hearing on Tuesday and Wednesday next week will then consider whether she has the power to stage a legal referendum.

If she loses the case, as most legal experts predict, she has unveiled a widely-derided plan to use the next general election as a “de facto” referendum that she would win if the SNP achieved more than 50 per cent of the popular vote.

Scotland’s most eminent macroeconomist has previously warned that Scotland would be forced to dump the pound for its own free-floating currency immediately after independence.

Prospectus for separation

Professor Ronald MacDonald, research professor of macroeconomics and international finance at Glasgow University’s Adam Smith Business School, has warned a separate currency not linked to sterling would be needed to pay off the country's multi-billion pound balance of payments deficit.

Ms Sturgeon announced more details of her currency plan would be disclosed next week in the third instalment of her new prospectus for separation, which is being produced by her civil servants at taxpayers’ expense.

She said the turmoil in the financial markets triggered by the mini-Budget demonstrated “the importance of us as we plan for independence of being careful, being responsible, and understanding the detail of what we’re seeking to do”.

The First Minister told BBC Radio Scotland that a central bank would be set up immediately after an independence vote and argued that the pound is “Scotland’s currency as much as it is the currency of the rest of the UK”.

However, sterling is the UK’s sovereign currency and any Scottish central bank would have no control over interest rates or money supply, with Scotland instead resorting to using the currency in the same way countries like Panama circulate the US dollar.

Asked how long a separate Scotland would use the pound, she said: “We’ll set out the detail of this when we publish the paper, but it’s important that it is guided by principles rather than fixed timescales. So the economic conditions, the building of the capacity in the central bank.”

‘Skewed priorities’

Pressed whether a Scottish central bank could vary interest rates while Scotland used sterling, Ms Sturgeon admitted: “Not while we’re using the pound. The Bank of England would continue to be in charge of monetary policy.

“But as we move to a Scottish pound, the Scottish central bank would take up many of these functions. So this would be a transition.”

Speaking earlier on BBC Breakfast, Ms Sturgeon said the £20 million cost of any independence referendum would be spent in the next financial year rather than the current one and was a very small proportion of her government’s budget.

Donald Cameron, the Scottish Tories’ Shadow Constitution Secretary, said: “This is just typical of Nicola Sturgeon’s skewed priorities. We are in the middle of a cost-of-living crisis, with families across the country struggling to make ends meet.

“Yet instead of telling us how they will help ordinary people right now, the SNP have kicked their emergency budget review down the road in favour of producing a self-indulgent and no doubt misleading paper on the economics of independence.”