By Drew Haughey
Would An Independant Scotland Lose The Pound?
This morning you will no doubt have seen a stream of headlines and television coverage focusing on George Osborne’s statement that “If Scotland walks away from the UK, it walks away from the UK pound”. If you are yet to hear about the speech elsewhere, then I advise you to take cover. Confusion is still rife, and conflicting statements are flying in every direction as the dust settles.
In short, the Chancellor’s stark speech follows an agreement apparently brokered by Alistair Darling (chairman of Better Together and former Labour Chancellor) between senior figures from both the coalition government and Labour.
Osborne, Shadow Chancellor Ed Balls and Chief Secretary to the Treasury Danny Alexander have came out in unison against the SNP’s plan for a currency union. A report by the UK Treasury argues that a currency union, or “sterling area” would require both the remaining UK and Scotland to underwrite each other’s banks, reach consensus on taxes and spending, and allow taxes from both countries to subsidise people of the other.
Going from a glance at headlines in the Metro and the Scottish Daily Mail this morning, it would appear that the Scottish Government’s room for maneuvering when it comes to sterling is zero. However, are the terms being confused? Does the ruling out of a currency union also mean Scotland cannot “keep” the pound?
According to recent broadcasts from both ITV and STV, these terms are not exactly synonymous. Representatives from the Adam Smith Institute told STV and ITV that Scotland “would not need England’s permission to continue using the pound sterling”, and quoted the examples of “Panama, Ecuador and El Salvador, which use the US Dollar without American “permission”, and, according to research by the Federal Reserve of Atlanta, consequentially have far more prudent and stable financial systems than if they were part of a formal currency union.”
Of the several options presented to Scotland, the one above seems to have been overlooked. The issue of a Euro has been brought up multiple times during the campaign ferocity, mostly in a negative light in the aftermath of EU instability.
Which options, then, are most feasible? Among the responses to the Chancellor’s other remarks to an Edinburgh audience, in which he also said that “One thing is certain – the only way to guarantee to keep the UK pound as our currency is to vote to keep Scotland a strong part of the UK”, former First Minister Henry McLeish wasn’t happy with the tone of the remarks.
Going as far as to tell BBC Scotland that Scots “shouldn’t be fooled”, the former Scottish Labour leader claimed that “This is entirely political and of course consistent with the unionist campaign. This is negative, it is about spreading fears and scare stories.”
This also leaves us an option strongly supported by the Scottish Greens: what if Scotland were to create its own currency? Is this outcome becoming more or less likely as the referendum nears?
As well as the party releasing a statement dismissing Obsorne’s words as “campaign bluster”, co-convener and MSP Patrick Harvie suggested that it would be common sense to investigate the potential of an alternate currency.
“The currency that Scotland uses can only be negotiated after a Yes vote, and it will be in the interests of both Governments to agree a smooth and rational transition. But just as Osborne can’t know that a deal won’t be done, Alex Salmond can’t know that it will. It seems that Scotland must keep open the option of our own independent currency, in case we need it sooner rather than later.”
Today’s bombshell has been declared by many outlets to be a pivotal moment; a peak of the independence campaign. Just don’t count on it being the last. And also, don’t count on any truces being reached before September the 18th.