Whilst I’m no fan of the chancellor, what he will say tomorrow will be a perfectly rationale defence of the interests of the rest of the UK if Scotland voted for independence.
The SNP’s reaction to the news that George Osborne is set to reject their plans for a currency union with the rest of the UK should Scotland vote for independence has been predictable to say the least.
In his response to news, Scotland’s finance secretary John Swinney has accused the chancellor of seeking to “bully Scotland”. Good party political stuff it might be, but what Osborne’s speech tomorrow will highlight is the naivety of the SNP’s proposals.
The fact remains that it would not be for an independent Scotland to dictate to the rest of the UK whether it would be able to stay within Sterling.
Yes it is true that the pound is as Scottish as it is English, but the very act of independence would mean divorcing Scotland from the rest of the UK. It would end Scottish inclusion in a UK wide military, it would end Scottish representation within the UK wide diplomatic service and ultimately it would end Scottish claims to remain within Sterling.
What Osborne’s speech will do is to highlight the SNP’s failures to convince the very people they would need to convince that an independent Scotland, keeping the pound, would be good for the rest of the UK.
Already Wales’ first minister Carwyn Jones has opposed the idea of a currency union on the basis that it would not be in the best interests of Wales. Speaking in November, he declared:
“Given the experience of the Eurozone in recent years, and the uncertainty which surrounded the various bail-outs, I am not convinced that a shared currency would work from the Welsh perspective.
“I would be uncomfortable being part of a currency union where there are competing governments trying to run it. If there is a disagreement, who has the final say? This is a recipe for instability and these things matter, particularly in times of crisis.”
Is this bullying Scotland as John Swinney might put it? Or is it a perfectly rationale argument put forward by a leader standing up for the interests of his nation?
Likewise, is it bullying Scotland when the ratings agency Fitch warned in December that an independent Scotland remaining in a sterling zone would create instability?
And is it bullying when the former deputy leader of the SNP Jim Sillars last month dubbed Alex Salmond’s currency plans as “stupidity of stilts”?
Whilst I’m no fan of the chancellor, what he will say tomorrow will be a perfectly rationale defence of the interests of the rest of the UK if Scotland voted for independence.
Far from bullying Scotland, it is a warning to voters that they might promise the earth, but on the currency union the SNP would need to embark on tough and unpredictable negotiations with the rest of the UK with no guarantee of success.
Rather than sniping and throwing accusations of bullying around, Swinney would do better to persuade the UK why it should accept an independent Scotland within a Sterling zone. So far, he’s failed quite spectacularly to do so.
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57 Responses to “The SNP are wrong on currency union”
Angus McIonnach
It will be interesting to see if Osborne does in fact unequivocally rule out a currency union post-independence. If he does (and the other UK parties follow suit), then the message from the Yes campaign should be “they are bluffing – sharing the currency makes economic sense – but here is Plan B [Scottish currency pegged 1:1 to sterling, no inheritance of UK debt, etc]”.
Part of me will be surprised by an unequivocal message from Osborne, since uncertainty is such a powerful weapon in the No camp’s arsenal. We’ll see!
Andy
Well why should the UK share its currency with an independent Scotland ? Why has Salmond not learnt the lessons of the Euro ? This has proved to be a disaster for smaller countries such as Greece. The inherent flaws in the creation of the Euro would be the same with a UK-Scotland currency union: you need fiscal union and political union too. Salmond wants exactly the opposite.
Angus McIonnach
Why would a currency union happen? It would be because alternatives would probably harm the economy. A currency union has in fact worked in the past with economies that form an optimal currrency area (Scotland and rUK are such economies). The Euro is cherry-picked to bolster the position of the No-campaigning parties whose aim is to deliver a No vote.
However, all this aside, by this point I don’t actually expect rUK to do the sensible thing. I used to think cool heads would prevail but not any longer.
Angus McIonnach
Feart means “afraid” (it’s a Scots word).
Alec
Thank you for that completely pointless interjection.