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As someone who was born in, lives in and works in the English enclave of the United Kingdom I’ve got no right to vote in the upcoming Scottish referendum. Despite the fact it feels a little undemocratic for one part of a country to vote itself independent of another part without that other part having a say, if the Scots wish to vote for independence they have the right to do so.

I have no axe to grind either way, although I do feel that as a nation we are greater than the sum of our parts but what’s the point of holding on to a partner who no longer wishes to be party to a relationship? Even one which, in this case, is a partnership of some 411 years standing since James IV of Scotland acceded to the English throne, beginning the engagement which was to end in the “marriage” in 1707 via the Act of Union.

The key issue here for me, as ever, is risk and in particular the one related to the currency.

Scotland still prints its own bank notes and has the right to its own currency should independence be gained but crucially what it won’t have is a central bank as Royal Bank of Scotland is a commercial bank with too many issues of its own to be a central bank right now and the Bank of Scotland has been swallowed up by Lloyds. Therefore it has to establish a central bank of its own or seek to use the Bank of England.

Nationalising RBS just isn’t a viable option – it’s in hock to the UK taxpayer to the tune of £45bn.

But, assume that Scotland were to go down this route, they would have to assume their fair share of this debt as it was created during the time of union.

So split that £45bn between the 64,097,085 people who make up the population of the UK which works out at £702 each but then take into account that the Scottish population is 8.2% of total. Even if the debt was to be split equally on a per capita basis, then Scotland’s share would be £3.7bn. Then there is the current value of RBS shares which is around £39.5m.

It is not unknown, when nationalising a business for the former shareholders to lose out completely, ordinary shareholders afterall are the ones who take the most financial risk in return for the reward of regular dividends and the appreciation of their asset but if RBS were to be nationalised and a proportionate element of the debt repaid to the UK Exchequer, then the newly formed Scottish government would not be very popular with their own constituents who held shares in the former commercial bank plus they would have to come up with a plan to pay the £3.7bn owing. The usual way for governments to raise money is by tax levies….and who would the Scottish government be taxing???

Nationalising RBS or the Bank of Scotland is therefore not an answer and setting up a new central bank (Bank of Alba anyone?) is extremely costly as a regulatory regime has to be established alongside it and a credit rating would have to be established for Scotland as it is for any other country which borrows on the International Markets.

This ability to borrow then begs the question as to how much Scottish borrowing costs would be – far less than that of the combined UK as the rating agency Standard & Poors have already indicated that an independent Scotland would have a worse credit rating than that of the UK.

With membership of the EU an ultimate aim, The European Central Bank has already scuppered the plan to peg a new Scottish Pound to Sterling as they would not allow any state to join the EU without their own independent central bank so even without the main three UK political parties saying that currency union with the UK is not an option, Scotland would need to establish its own currency and its own central bank.

Again, I ask, at what cost???

And how long would it take to force the Bank of Alba to sell its reserves to prop up the currency. The risk of currency speculators sensing a profit could be just too great for a small nation to withstand.

Can you see where I am getting to now by saying that the United Kingdom as a nation is greater than the sum of its parts? It’s stronger, it has more financial resources at its disposal and it has a greater population to shoulder the tax burden.

I know this is an emotional issue north of the border, I get that and would truly be wishing Scotland well if she votes for independence in a couple of weeks but I see a huge amount of risk ahead if that is the case and this time, this is not one I can easily see a mitigant for.

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