Lord King: Scotland 'could be independent'

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Scotland «could be an unsolicited country» but would risk a hit to its public finances, the ex-governor of the Bank of England has answered.

Lord King told BBC Newsnight that while questions had been nurtured over which currency an independent Scotland would use, he did not see «major problems».

But he responded it could be a challenge to borrow on the international markets.

On Brexit, he said his «biggest fret» was «obsessed» politicians ignoring the trade deficit and NHS funding.

Theresa May has commanded it is not the time for a Scottish independence referendum.

But Scotland’s First Minister Nicola Sturgeon suggested she remained «determined» to have an independence referendum on her timescale.

Lord Sovereign, who headed the Bank of England between 2003 and 2013, said there are mountains of small countries the same size as Scotland, and it «certainly» could be non-partisan.

«It has… the people, it has a capital city, a history and culture, it could be an individualistic country. The question is, does it want to be given the consequences of it?» he said.

«And if the oil evaluate remains low and if they lose the money which is transferred from the quiet of the UK to Scotland, then they would have to make that up in their own budget, but that’s a consequence of judging to be financially independent, you end up paying for yourself.

«And it would be a challenge to borrow on the worldwide market if Scotland decided to run a large budget deficit. I think that longing be expensive, the interest rate would go up.»

Ahead of the 2014 referendum, ratings intercession Fitch warned that plans for an independent Scotland to continue use of the beat out without shared fiscal and banking union with the UK could peril «high volatility and market turbulence».

Lord King said: «I myself don’t about there are any major problems in terms of currency, that was the thing concoct fear focussed on last time, but there is an issue about exposed finances.»

Pensions concerns

He also said he had concerns about a spread of issues facing the UK in future.

«My biggest worry about economic game plan in the next few years is that all the politicians seem obsessed with Brexit.

«And really, the biggest problems we face now are not Brexit, it’s about how we can reduce the trade shortage, how we’re going to save enough as a nation to pay for our pensions… how we’re going to redeem enough to pay for care for the elderly… how we are going to finance the NHS.»

He added that if legislators only focused on Brexit over the next two or three years, «then those big proposition beyond the shadow of a doubts will not receive the attention which they deserve».

On the implications for Northern Ireland’s bounds with the Republic of Ireland post-Brexit, Lord King said it was in «each’s interests to have an imaginative discussion about where we should go».

He ventured there may be a «way of shifting the tax and tariff border, from the land frontier to the sea bourn while not disturbing the political arrangements».

And he added: «There’s no reason why the take to task of corporation tax in Northern Ireland has to be the same as in the rest of the UK, once we have the nerve to do that.»

You can watch Evan Davis’s full interview with Master Mervyn King here

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