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.
• 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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62 Responses to “Lamont teams up with Treasury to reel in Salmond”
Anonymous
Yes, I do know precisely what it means. Of course you have to deny it.
And when you pretend to be Labour but are Tory, yes, that’s exactly what you’re setting people up for. Strange you’d boast about it, but hey.
It all adds up to what you’re planning…which would be highly unfortunate for the populace as a whole.
Robert Ryan
if you missed Johann Lamont absolutely take Alex Salmond apart here it is again: http://t.co/V9jdJeDC #ScottishLabour #sp4 #fmqs #SNPfail
Darren Hughes
Johann Lamont and Alex Salmond clash on the economics of Scottish independence http://t.co/aYQ8e8kj
James Mills
Left Foot Forward's take on FMQs this week. http://t.co/7N8dwoYW
Anonymous
The bank of England does not take Scotland into account any more than it does the West Country or the North of England..or Wales…or anywhere else other than the London area.
On the question of ‘shaky history’ ….the Scottish referendum is not about ‘secession’, it is about the dissolution of the Treaty of 1707; the Acts of Union in the Englsih and Scottish parliaments of 1706-7 are not relevant in the slightest since they were both no more than enabling legislation to dissolve themselves in favour of a parlaimentary union. This is not an aspect that is widely understood, but neither the Treaty nor the Acts are particularly complicated, so it is worth reading them.
Hard to see how it would be necessary to pay for using Sterling; it is currently a shared currency across the UK and ijn any case that’s not generally how shared currency arrangements work. Remember that – despite the name – the Bank of England is, really, the bank of the UK. In the event of dissolution, if Scotland were to inherit a share of the UK debt it would also inherit a commensurate share of the UK assets, not simply those that happen to be located in Scotland. Naturally there would be a good deal of horse-trading; there are very few defence assets that the reamining UK coukld afford to dispense with and very few that would be desirable for Scotland, so debt/asset share is not simply a matter of crude arithmetic….Scotland would not want Trident, nor a share of the massive range of government buildings in England so that would be reflected in the share of debt. Equally, the remaining UK would probaly have very little interest in having a share of the assets of the Scottish court system (or Scotland in having a share of the asets of the CPS). I doubt that dissoultion will come to pass, but there’s no point in ignoring the possibility or in being hostile about it if it does. A dog-in-the-manger attitude won’t help anybody. In the end of the day, if Westminsterr and Holyrood failed to sort it all out in a resaonably equitable manner voluntarily, the EU and the US would pressure them into doing so.