Lamont teams up with Treasury to reel in Salmond

It has been an unfortunate week for Alex Salmond, who was reprimanded by both the Scottish Labour Party and the Treasury in the space of 24 hours.

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It has been an unfortunate week for Alex Salmond, who was reprimanded by both the Scottish Labour Party and the Treasury in the space of 24 hours.

After an especially savage grilling by leader of the Scottish Labour party Johann Lamont, Salmond claimed that it would be “entirely reasonable” for a separate Scotland to have the same influence that the UK Treasury does over the Bank of England’s monetary policy committee (MPC).

Watch the exchange at yesterday’s First Minister’s Questions:

The Scotsman reports:

Pressed by Ms Lamont to provide “details of that agreement” that would allow an independent Scotland influence over the Bank of England, Mr Salmond insisted it would be “entirely reasonable” for a separate Scotland to have the same influence the UK Treasury has over the MPC and that there was “nothing unusual about that” arrangement.

He told the Scottish Labour leader he had spoken to Sir Mervyn King, Governor of the Bank of England, in February, but he did not say what he had discussed with him.

He told MSPs that, in the event of Scotland becoming independent, it would “expect to be part of the appointments process” if it continued to use the pound.

But a spokesman for Mr Salmond was later unable to give examples of similar arrangements of other nations that share a currency having representatives on the body that sets interest rates.

 


See also:

Cameron heads north, Salmond heads south and Mervyn’s living in the future 16 Feb 2012

A separate Scotland will be worse off if it keeps the pound 10 Feb 2012

Swinney on Scotland currency – more questions than he answers? 2 Feb 2012


 

Unfortunately for Salmond, the treasury were quick to rebuke his claims in a statement released yesterday:

“In that scenario, [an independent Scotland] would have no say over its own monetary policy as set by the Bank of England.”

Left Foot Forward have already reported on how an independent Scotland would be worse off keeping the pound:

The most crucial part to understand about sterlingisation is that a separate Scotland, without a currency board, will have no control whatsoever over monetary and exchange rate policy. Salmond has been mistakenly pushing the argument that goes along the lines of:

‘The Bank of England has had independent control over monetary policy since 1998 and therefore will continue to take Scotland into account.’

Not so. The Bank of England is currently obliged to regard the effects its decisions will have on Scotland. Without Scotland being part of the UK and with no currency board, this will not apply. In other words, decisions that have an impact on Scotland will be taken in another country that is focused on stabilising the national economy, not the Scottish one.

Instead of actually attaining independence, a separate Scotland will ironically tie itself to the rest of the UK through the importation of the effects of monetary policies conducted by the Bank of England.

Why is Salmond so desperate to push for an independent Scotland, or as he calls it “a sterling zone”, which would allow the Bank of England to disregard Scotland when creating monetary policy?

 


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