SNP: Derek Mackay proposes transition to Scottish currency

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John Swinney, Scotland’s Deputy First Minister was forced to admit even in a financial crisis, quantitative easing would not be available to newly independent Scotland under the party’s currency plans. The process of quantitative easing allows a bank to purchase certain amounts of government bonds or other financial assets to inject money into the economy.

Under SNP plans, an independent Scotland will replace the pound with a separate Scottish currency “as soon as practicable” within “several years”.

But Mr Swinney told BBC Radio Four’s Today programme that quantitative easing would not be available “in that interim situation” after independence until Scotland adopted its own currency due to the use of the pound.

This, the Scottish Government minister said, was because “you’d obviously be operating in a framework which was determined by decisions within the Bank of England, for example”.

The Bank of England pumped hundreds of billions of pounds into the British economy during the COVID-19 pandemic, most of which has been spent buying UK Government bonds.

This has increased the price of the bonds, kept interest rates low and helped the UK Government to raise the funds it required for public services and furlough as tax revenues collapsed during lockdown.

Asked whether that would leave an independent Scotland “hugely vulnerable”, he said: “Obviously, we would then have a whole range of other powers available to us that would enable us to tackle the situation.”

But Scottish Tory economy spokesman Liz Smith MSP said: “John Swinney has let the cat out of the bag.

“The SNP’s plans would only create huge uncertainty for hard-working Scots who would potentially be hit by rising interest rates under these proposals.

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“Not having access to quantitative easing would mean the SNP would be completely unable to deal with major financial hardships in the future.”

It comes after a poll shows Scottish voters wanted clarity on the pound’s status before a second independence referendum.

Nearly half said all Scots polled claimed Nicola Sturgeon should set out her currency plans before another referendum.

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Four in ten also said they want jobs and the economy back at pre-pandemic levels before any re-run of a 2014 vote.

Will Tanner, from Onward, who conducted the poll, said: “The message is clear.

“Instead of ratcheting up rhetoric, the Scottish Government should work to prevent a fourth wave of infections.”

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