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
Have you got a reference to that piece of international law?
If there’s going to be a division of the assets and debts of the old UK between the new states of Scotland and England then the existing Central Bank of the UK and its currency will be part the negotiations.
Mr. Sensible
I don’t pretend to understand the technical aspects of this, but those in favour of independence yet keeping the pound should look at the eurozone…
Spammo Twatbury
The bottom line is, when it comes to the independence negotiations Westminster will give Scotland just about anything it wants in return for parking Trident in the Clyde for a few more years. Believing anything else is irrational verging on delusional. To keep its permanent seat on the UN Security Council the UK would give EVERY seat on the MPC to Scotland if that’s what it took. Salmond’s only problem is that he can’t say that.
Anonymous
Oh right, that line. At best, 6-8 billion of leverage, since many of the facilities CAN be moved.
Spammo Twatbury
Absolute rubbish. Coulport can’t be replicated in England for a decade, and without Coulport you’ve got nothing.