It has been revealed that the Bank of England has done no analysis
regarding the prospect of Scotland becoming independent
Scottish independence: Bank of England “has not done any analysis”
by Jamie Mann
The Bank of England (BoE) “has not done any analysis” on the possibility of Scottish independence, internal emails released under the freedom of information act have revealed, according to the Scotsman.
The UK central bank was apparently contacted by a member of the Treasury in November to find the relevant person to address the “Scottish question”.
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Replying to the request, the bank official whose name was concealed wrote:
“The Bank has not done any analysis on this issue, and therefore there is no better point of contact beyond our office, and no work we are doing on which to offer information. The only staff engagement has been for a small group of experts… to meet with representatives of the Scottish civil service, in order to provide strictly technical advice on related economic issues.”
Alex Salmond has said that BoE governor Sir Mervyn King promised to “respond to requests from the UK and Scottish governments for technical advice” and “engage with the Fiscal Commission” established by Scottish ministers.
However, the central bank denied claims by Finance Minister John Swinney that it had been in a “very helpful dialogue” with the Scottish government.
The SNP has repeatedly stated that their vision for an independent Scotland’s economy would include the BoE as the central bank and regulator, as well as retaining Sterling in the form of a “Sterling zone” with the remainder of the UK.
No solid information has yet been clarified by either the BoE or the Scottish government about the practicalities of how the relationship would work between the two States, should Scots vote for independence in 2014.
There is no assurance that Scotland would have any significant influence over the Bank’s economic powers.
Should the central bank choose to print money and increase inflation, Scotland would be unprotected against leveraged buyouts of everything from residential buildings to large companies from what would be foreign banks.
Lending or speculating with newly created money?
News that the BoE and Treasury-established Funding for Lending Scheme (FLS) is likely to be extended despite evidence of minimal lending to businesses in the last three months of 2012 has surprised many observers.
Chancellor George Osborne and senior Liberal Democrats including Nick Clegg and Business Secretary Vince Cable want FLS to be prolonged beyond summer 2013, according to the Financial Times.
FLS was created to provide cheap credit to banks, on the provision that the money would be used to lend to small business and homes, but there has been little sign of any benefit to businesses.
The deputy prime minister said the solution was to put the FLS “on steroids” while Mr Cable has ordered officials to find out realistic ways to extend the scheme to SMEs.
There appears to be a consensus within the Westminster government with a senior Lib Dem stating yesterday: “We are pushing for FLS to be extended and there is general agreement between both sides of the coalition,”.
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