ALEX SALMOND -I WANT A DIVORCE - BUT WE CAN GO ON LIVING TOGETHER

A currency union after separation needs full hearted consent on both sides of the border. There is no evidence of that this exists.

For many Scots the prospect of sharing a currency with England , Northern Ireland and Wales is a very important factor in considering their vote in the September referendum. This is no wonder. About 40% of the Scottish economy is trade with the rest of the UK , currently conducted without the uncertainties ,costs and difficulties of currency exchange, border controls , differing regulations etc. Alex Salmond is absolutely right to try to place himself at the head of those who want to keep this union. Indeed he has promised Scots that they will be able to retain this , and indeed many other aspects of the current union , if they vote yes.

As Mr Salmond's own experts point out such a currency union , in the event of Scotland voting to leave the UK , depends on the agreement of what would be two separate states. It would be a big commitment. A single central bank would determine interest rates and the money supply over which neither Government could exercise control. Some kind of overarching political body would be needed to supervise the Central bank and to set budget common budget limits for the two countries.

There might well have to be agreements so that the countries did not engage in tax competition to try to pinch jobs from each other (something which Mr Salmond has in mind). Both governments would need to be willing to stand behind each others banking system in the way in which the UK Government bailed out two Scottish banks with 10s of billions of pounds in 2008.

It would clearly be necessary to persuade the Westminster Parliament to legislate for such an agreement. This in a parliament where you would be lucky to get 50 votes to join the European currency union if anyone had the courage or foolishness to put such a proposition forward. The three major UK political parties representing more than 90% of MPs have all committed themselves against it. As far as I can see not one UK based individual or organisation of economic standing outside Scotland has come forward to disagree.

In response to this Mr Salmond might be considering the methods of the admired Mr Putin. However he normally puts forward two other arguments - neither of which , I am afraid , hold much water.

In the first place he points to the massive value of trade between Scotland and the rest of the UK. It is indeed very large as a proportion of the Scottish economy. Since the economy of the rest of the UK is about nine times bigger than Scotland’s that same volume of trade is nine times smaller as a proportion of the economy of England , Northern Ireland and Wales. The impact of exchange costs is so much less , almost certainly less than the cost of staying out of the euro.

In the second place he argues that a currency union is Scotland's right. After all we have made a great contribution to the UK economy , including its currency over 300 years. If we split we are entitled to a fair share.

I have always found this an odd argument. We are told that Mr Salmond and his advisers carefully considered the options for a Scottish currency and that indeed Scotland might not want to stay in a currency union for ever. Apparently however England Wales and Northern Ireland do not need to, and indeed should not , give any consideration to not entering a currency union or leaving one until Scotland is ready. Furthermore they are bound to accept that Mr Salmond can cut corporation tax in Scotland to try to pinch jobs from the North of England.

Surely two quite different things are being confused here. Scotland has indeed made a massive contribution to the UK economy and continues to do so. It has been often pointed out that Scotland

might well have made the biggest per head contribution of any country to industrial development in the 18^th and 19^th century. We are still at the forefront of many industries.

If we decide to leave the UK , which we have every right to do, and we opt to have our own currency we are entitled to about 10% of the UK’s currency reserves and massive help in establishing a Central Bank and all the other machinery necessary. There can be no objection to us calling our currency the pound. As Mr Salmond says this is just like splitting up the assets after a divorce. What we cannot do is a bind what would become another country to the massive commitment of a formal currency union. That is like a husband asking for a divorce and then insisting that the couple continue to share the same house.