Nicola Sturgeon’s SNP Scottish Government was re-elected in May, with the First Minister promising a second referendum on independence. But Europe editor at The Banker, James King, has explained Scotland would be forced into creating its own currency if it separated from the UK. He explained that the country’s huge deficit would cause significant trading problems in the future.
Mr King said: “I think if you look at the large scale macro imbalances in the Scottish economy today and talking here of the very large fiscal deficit coupled with a very large current account deficit.
“It really isn’t feasible for Scotland to become independent without having its own currency which by some estimates would be devalued up to 30 percent relative to the UK pound.
“That really isn’t feasible.
“What the SNP are proposing is to maintain an informal monetary union, maintain the pound because it’s politically popular to do so.
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“But actually if Scotland were to achieve independence, it just couldn’t maintain that informal union just because Scotland’s current account deficit is so high.
“It just wouldn’t be competitive in world markets as things stand today.
“In reality, what Scotland has to do is push ahead with the very painful process of launching its own currency.”
It comes as the UK’s nuclear deterrent could be moved abroad if Scotland becomes independent, secret Government contingency plans reportedly propose.
An MoD spokesman said: “The UK is strongly committed to maintaining its credible and independent nuclear deterrent at HM Naval Base Clyde, which exists to deter the most extreme threats to the UK and our Nato allies.
“There are no plans to move the nuclear deterrent from HM Naval Base Clyde (Faslane), which contributes to Scotland’s and the wider UK’s security and economy, and its supporting facilities are safe for local communities.”
The Financial Times cited “several senior officials” who have been briefed on plans for what would happen to the nuclear deterrent if Scotland becomes independent.
According to the newspaper, the preferred option would be to move the nuclear deterrent to the Royal Navy base at Devonport in Plymouth.