If I was Scottish (and a far as I can tell there's not a hint that I am) I would be livid at what happened in the Brexit vote which requires that the country be dragged out of the EU against its will. Of course I would want a second referendum on independence in that case.
But, and this is a massive 'but' to which I drew much attention when I spoke to many of the Westminster contingent of SNP MPs a couple of months ago, the SNP would have to resolve the issue of Scotland's future currency before taking the risk of suggesting another referendum.
I believe that the currency issue did more than anything to deliver the late swing to No in the last referendum. The question of the choice between the pound, euro or a currency of Scotland's own was never clarified, and that was fatal to the cause of independence in 2014.
Unless the issue is resolved before another referendum I strongly suspect that this issue might again be fatal to the cause of Scottish independence.
There are only four options. They are the pound, the euro, the US dollar or Scotland's own currency.
Most will be surprised by my inclusion of the dollar. When Scotland was an oil state this might have made sense, however. But whilst it will still be an oil state I don't think Scotland wants to rank alongside Cayman in pegging itself to the dollar, so let's dismiss that option.
Then there is the pound. There are three good reasons why Scotland will not want to use the pound. The first is it is English. Enough said. The second is that it will have been devalued for reasons that do not favour Scotland after Brexit and that may not make it a desirable link. Third, it is seriously doubtful that Soiotland wants to be linked to any currency, as I explain below.
The euro presents all sorts of problems. It is simply not suited for the use of small nation states. Denmark and Ireland prove that. Their fortunes have not entirely hung on their choice of whether or not to have the euro, but there can be no doubt Denmark came off best, and that might be increasingly true over time.
So then there is the option of a Scottish currency. Whether or not this is an option for Scotland will depend on the opinion of the EU if Scotland wishes to apply for membership. At present an application for membership requires acceptance of the euro as a currency. One has to wonder how long that will be the case, but it is a massive obstacle at present, because of all the options available to Scotland easily the most attractive is its own currency.
There are three reasons for this. First, it can price itself into work. This has always been the reason for a small, peripheral state to have its own currency. It is the best reason for not embracing anyone else's currency. If full employment is the goal of government (and I suggest it has to be) then the flexibility to devalue to deliver that goal is vital to a government.
Second, as I have explained in The Joy of Tax, no government can be wholly in control of its macroeconomic policy, its tax system or its monetary policy without its own currency. In other words, it is not wholly independent unless it has a currency of its own.
And last, whilst the ECB continues to heed only the needs of Germany the Euro is going nowhere economically. The EU may, but the Eurozone is not.
Of course, I am simplifying arguments in a blog of this length but that does not, as it happens, change the message in this case. I think Scotland has an absolute right to a second referendum. But if its nationalists want to succeed this time they have to say what they are going to do with the currency. I doubt they can win otherwise because it's a question at the very heart of what the new nation will be and it was ducked last time in error.
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It wasn’t ducked. The Scottish government was very clear that Scotland would use the £. That never changed. It was, in my view, a profoundly wrong decision, though insofar as the aim was to “not frighten the horses” arguably understandable. Didn’t work if that was the thinking, though. For the obvious reason that it let WM muddy the waters: which they would do on a big scale if the £ adopted after independence, and is the reason it is wrong anyway
Scotland needs and ought to have its own currency. That is crucial. More important that EU membership if it is a straight choice. But it need not be, for Scotland can perhaps continue EU membership, rather than join. That was a possibility before but it is much more so now, I think.
I think that it is wishful thinking to believe that Scotland could be independent before the UK leaves the EU
But I may be wrong
It has happened
The key is to never call a referendum unless you know you will win it ( David Cameron should take note after the most spectacular double own goal in political history – losing 2 unions in one go all based on a political gamble sadly ). Nicola Sturgeon is a more popular politician than her predecessor ( the Salmond factor did put a lot of voters off ) and is unlikely to make the same mistake. Yes the currency was a big issue but then so was EU membership and that was one of the Better Together’s pledges. That is gone now so I can’t see the Scottish electorate’s undecided voters going for stay in the UK again. In short if another independence referendum goes ahead I would be surprised if the result was the same as last time. Whether that would be a good or bad thing who knows. But at least I could get a Scottish EU passport I suppose.
You may be right. But I see no great rush to launch art 50: and a rapid move to negotiate from the SG. We shall see.
It’s interesting to note that many of the arguments in favour of a single currency have been progressively eroded by the rise of electronic payments and banking. It’s now possible to have many smaller local currencies that are automatically interconverted when buying things in/from other regions.
That’s meaningless: the Bristol pound is a pound, for example. A local currency with a 1:1 conversion rate has a local impact but it is not a separate currency
At present an application for membership requires acceptance of the euro as a currency.
That doesn’t make sense. Firstly, the Romanians, Bulgarians and Croatians were all admitted with their own currencies – as far as I know they are stil using lei, lev and kuna respectively.
If what you mean is that the acceptance criteria mean a trajectory towards eventual membership, I’m still not sure that is true – neither the Czechs nor the Poles have yet made any substantial strides towards converting from korunas and zlotys to euros, while the Swedes avoid the issue altogether by refusing to join ERM II (which is a necessary pre-requisite to joining the euro, but which is voluntary). I think I could see the Scots going the same route.
There is also the small question of what exactly you mean by money – if you are talking notes and coins, the infrastructure already exists to print money that is identifiably a Scottish pound, much as was the case in Ireland before they adopted the punt and cut ties with sterling. All you would need was coins for small change, and a decent digital infrastructure to allow small mobile payments would take care of a lot of that requirement.
The rules have changed since the last accession
They could never have applied to Sweden: it was a pre euro member
And money means the national currency – which for any new member now has to be the euro
Please tell me when the alteration was made: I’d like to see chapter and verse for who took the decision and when.
As far as I can see the requirement to move to the Euro was written into the 1992 Maastricht Treaty, but subject to a series of conditions. I can find no reference to rule changes post the latest accession in 2013.
It’s perhaps worth pointing out that the eight non-Euro using EU states have a combined population of around 100 million people and a combined GDP rather larger than Little Britain’s. Furthermore, I rather think the ECB will be more careful of who they are happy to admit to the Euro club, having discovered how Goldman Sachs played smoke’n’mirrors tricks to make the Greeks and Italians appear to comply.
There wasn’t a euro in 1992
The rule change mist have been since then
NEF did a study on a Scottish currency which seemed highly positive (tho’ it did assume England as part of the EU, and that English pounds would be acceptable as tax revenue, to equalise value and avoid exchanges springing up along the border)
But it seems to me that one of the most powerful democratic arguments for a Scottish Pound is that it can’t be shovelled offshore – unless Panama starts accepting Scottish pounds as currency, which is possible, but less likely?
http://www.neweconomics.org/blog/entry/time-to-think-bigger-on-scottish-currency
I am Scots. Since my father moved into a care home last month, I would appear to have part ownership of a home in Scotland. Cut and run seems like an awfully tempting idea just now…
thank you for this – as ever, refreshing and grounded in sense.
I cannot tell you how pleased my sons are that they should qualify for Irish passports
Why is that – surely if you are born and brought up in a country you have an affinity with it. Surely that is the heart of the integration issue I would have thought.
Sorry – lost you
What I meant was if you are born and brought up in country A why would you decamp to country B just for the convenience of a passport ( I recognize there are good reasons for changing nationality but surely convenience us a weak reason ) .
You usually don’t need to do so
As millions know
You have lost me now. Even if I wanted to I can’t get a ‘second ‘ passport ( well actually that is wrong we all can if we want to pay for one – even an EU one can be bought – but I can’t afford one ! ). The point I was making is I was born and raised here l live here , so a convenience second passport seems to me wrong ( unless you were actually born elsewhere and have links with said second country which I am sure you do). The point is where does it end generationally.
Grandchildren is the Irish rule
Like the football rule !!
Seems reasonable to me. But I did not know that – I assume that is the Irish rule so not necessarily the norm elsewhere . No need to respond to that – just musing. I go back 5 generation Scots on both sides ( that is as far back as I got ) so no second passport for me unless I win the lottery.
Scots is a language, not a nationality.
Your sentence should read “I am Scottish” (but I doubt very much that you are, since you can’t even use the right adjective).
You can, if you wish, say “I am a Scot” but never “I am Scots”.
Scots is a language? First I’ve heard of that. There is of course Scottish Gaellic and a number of Scottish dialects but a ‘Scots language’ is news to me.
I may have misinterpreted your comment that Scots is not a nationality. Scottish of course is a nationality.
Manda may be in America – who knows – but it would explain things as Americans do not always see the distinction.
Scotland – a country.
Scotch – a whisky (mainly used outside our country).
Scots – a language (Google it).