The availability of bank finance to small and medium sized enterprises (SMEs) is important to allow SMEs to start up and finance investment for growth. To assess changes in such availability over 2001–12, we used data from a series of surveys that provide detailed information on the characteristics of a sample of UK SMEs, their owners and experiences of obtaining finance. Using econometric models, which included controls for SME characteristics and risk factors, indicators of changes in the provision of bank lending over the time period abstracting from borrower risk could be obtained. The results suggest ongoing restrictions on the availability of SME bank finance up to 2012 – which appear to have persisted into 2013. Further research using macro data shows an impact of economic uncertainty on such finance. If unresolved, these patterns could imply adverse effects on economic performance in the short and long term.

This paper considers which currency option would be best for an independent Scotland. We examine three currency options: being part of a sterling currency zone, adopting the euro, or having an independent currency. No currency option is the best when considered against all criteria. Therefore, making the decision requires deciding which criteria are most important. Recent events around the world, particularly in Europe, show that it is essential to consider how an independent Scotland would seek to adjust to adverse economic circumstances. In economists' terms, it is important to think through the ‘off-equilibrium’ adjustment paths of each of the currency options. The amount of public debt, and so the capacity for a fiscal response, is a critical determinant of these paths and therefore of the optimal currency choice. Since commitment to a currency union by an independent country can only be conditional, an independent Scotland might find it optimal to abandon the currency union in the future if the financial stability advantages to having its own currency begin to outweigh any disadvantages due to trade and transactions costs.

No abstract

No abstract