This, from the Guardian, is quite shocking:
The Treasury has warned that it could refuse to agree a formal currency union with an independent Scotland unless Scottish public spending was heavily restrained and the country cut its debts to reassure the markets.
The message is loud and clear and is that despite austerity failing and whatever the Scots decide on independence the Treasury is going to seek to decimate the Scottish economy and ruin ordinary Scot's prospects. I think there there are three fair reactions.
The first is "I admire the Treasury's faith in democracy".
The second is quite unpublishable and would be what I would be saying if I was Scottish.
The third is that here we have another bankrupt idea, which is that states should share a currency. They clearly should not. It really is time the SNP got their heads round that, and soon.
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Its a “mini Euro” situation all over again. If you want to rely on someone elses currency to prop up your failing government you have to accept that they will want to call the shots. Germany v Greece/Cyprus/Portugal etc..!
So don’t do it!
I think the key point here is your last one. It is now established that you can’t have fiscal autonomy without your own currency. If the Scots share our currency, then we will be in a three-legged race with them as our partner. They can’t just do their own thing. England is much bigger than Scotland and is bound to dominate the currency union. If the Scots want the reality of independence rather than a sham, they must have their own currency, although I can see why they might not want to join the Euro.
Quite how the SNP can claim “independence” if they share a currency with a much larger entity who might have quite different economic and financial issues to address is baffling. If Westminster is failing to control The City and its offshore entities how does the SNP hope to? It may be that the old RBS Clan Chiefs still influence their thinking.
The SNP really have to say they’re planning their own currency to be credible
Why would Scotland want a currency union with a country that’s run by myopic fools?
Good question
Surely in a democracy if the people are going to vote then we need to ensure that they have all the relevant information to enable them to choose. One such element of information is that they need to understand that they would be on their own, economically, if they left the UK. That could mean a Scottish currency, or it could mean a fiscal union with either the UK or the EU. In the case of a fiscal union though it would need to meet the conditions of entry.
Giving people this information is not bullying, and yes of course there is spin from Osborne et al, but Salmond is also spinning (and possibly lying) for all he’s worth on the issue.
And we can argue until the cows come home as to whether or not Scotland would be better off economically outside the UK. Frankly, neither of us know. How oil reserves would be shared is not certain (you can bet that the rest of the UK would fight tooth and nail for as much as it could get), nor is the division of the national debt.
It looks more and more like a deliberate policy of annoyance. I wonder why ?
The Treasury is simply repeating the lessons learned from the Euro. If the Scots want a currency union, then they have to lose some control over their monetary policies. If they want to have the Bank of England as the lender of last resort they have to play by the BoE rules.
So the Scots need their own currency
That was my point
If they want to have the Bank of England as the lender of last resort they have to play by the BoE rules.
I thought the public as tax payers were the ‘lender of last resort’ these days???
As anticipated by LEAP2020, Scotland will be the next part of British islands to join Eurozone. This will for sure reassure the markets, whatever they might say in the FT or mainstream media.
Euroland has a much better opinion about democracy than Treasury. Welcome Scotts!
The scottish groat has been mooted, but discouraged by supposedly wise economic advisors.
Big mistake, but eck can turn on a sixpence if required, so maybe this crass fearmongering will nudge them in a more constructive direction.
No currency issuance equals local government or colonial status, not independence.
I thought there were still currency issues related to an independent Scotland joining the EU or was that resolved? Last I read Scotland would have to reapply to join the EU and maybe requiring it to join the euro?
“Any country wishing to join the European Union must, among other things, transpose all of the Community’s economic and monetary rules into its domestic law. The euro is not introduced immediately upon accession: a Member State must first comply with certain economic requirements (“convergence criteria”).” – http://europa.eu/legislation_summaries/economic_and_monetary_affairs/enlargement/index_en.htm
So Scotland *could* avoid joining the Euro by simply not complying, though there could be fines imposed by the Commission if they deliberately do so.
As to whether a former part of an EU member state automatically accedes to the union, the answer is really unknown. It simply has not yet happened. The Czech Republic and Slovakia, and the Balkan nations formerly making up Yugoslavia, had separated from each other several years before the EU accession process got going for those countries.
The EU treaties as written say that they are treaties between (the other European countries) and the “United Kingdom of Great Britain and Northern Ireland”. Similarly the derogations, such as *not* joining the Euro, are for the United Kingdom of Great Britain and Northern Ireland. On the assumption that Scotland would be counted as a newly independent state, and the remainder of the UK to be the continuation of the former UK, Scotland would have a clean slate to renegotiate all treaties (by the 1978 Vienna Convention on the Succession of States in respect of Treaties). If, however, it were considered that two new states had emerged, both would be bound by all previous treaties. It may depend on how the international community decide to treat the situation. I would expect generally that Scotland would be treated as a newly independent state and the UK continues without it, otherwise, if applied consistently, you’d see Scotland seated as a Permanent Member of the UN Security Council!
A discussion of the situation of successor states and their treaty obligations can be found at http://www.ejiltalk.org/the-tricky-question-of-state-succession-to-international-responsibility/
I am not a lawyer and all links were found in a search engine!
In fact you can pretty much guarantee that the London government will be fighting tooth and nail to be considered a continuation of the pre-existing UK, otherwise London could lose its seat on the Security Council. On the other hand, it could be the only way for the UK to legally leave the EU, so there are choices on both sides.
Well I am pleased you cleared that up because your point was completely hidden by what you said initially.
This constant bullying of Scotland may well backfire. An argument that we are better off in the union premised upon “we will push you around even more if you try to leave” is not very convincing.
As for the SNP policy on currency, don’t hold your breath for anything. The party is nowhere near consensus on it and as such the status quo is the easiest thing to endorse in the meantime. A large part of the SNP want to (or at least wanted to) join the Euro but nobody seriously thinks that will happen now, but the bias in favour of currency union seems to stick around. There are senior members of the SNP (Michael Russell for instance) who favour a new currency though.
As for my own view, the Bank of England has never shown much consideration for Scotland’s needs, unemployment in the north being a price worth paying for controlling inflation in the South and all that and I don’t see how that will change in the event of independence.
I think your conclusion correct
Debt-free government created money or a nationalised bank based more or less on the model of the Bank of North Dakota for Scotland? 😀