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Bringing Up Bawbee



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Scotland will be voting on independence from the rest of Britain on September 18, not so coincidentally the 700th anniversary of the great Scottish victory over the English (won, quite remarkably, without any assistance by Mel Gibson) at the Battle of Bannockburn.

The rights and wrongs of Scottish independence are a complex topic (at least for me), but one for another time: suffice to say for now that I doubt that it will go through. That said, in an important and lengthy piece for The Spectator (pay-walled, read it if you can) Alex Massie argues that this may be wrong:

Too many [British] unionists think their case is so self-evident that it doesn’t need to be made with the same passion or verve. They should be afraid — their country may just slip away from beneath their feet.

Alex highlights the diffidence of the “British” campaign, a diffidence that owes much to the English fear of being seen to be throwing their weight about north of the border, and also to the difficulty faced by London’s Conservative-led government in attempting to woo voters in a country considerably to the left of the English mainstream (there is also, though Alex doesn’t mention it, the tricky question of what the English think about all this: too much kowtowing to Glasgow does not play well in Guildford).

In any event, the debate has now taken a tougher turn, as it should have done long ago. British finance minister George Osborne has just traveled to Edinburgh with an unwelcome message for the Nats: Welcome tae yer gory bed: No pound for you! Well, perhaps he put it a little more politely than that.

The Daily Telegraph reports:

George Osborne has categorically ruled out any future UK government joining a currency union with an independent Scotland, leaving [Scottish First Minister] Alex Salmond’s plans to share the pound in tatters. The Chancellor used a speech in Edinburgh to say: “If Scotland walks away from the UK, it walks away from the pound.”

Dealing with the First Minister’s claims that Scotland can share sterling with the UK despite separation, Mr Osborne said that “people need to know that is not going to happen”.

He outlined the four criteria that would be needed to make a currency union work, based on analysis published today by the Treasury, and said neither the Scottish or British public would accept the reality of such an arrangement. The four necessary criteria were banking union, great fiscal risk sharing, the same monetary policy and a union that could prove its permanence.

Britain’s Labour and Liberal Democrat finance spokesmen have signaled their support for Osborne, as indeed they should.

Yes, London is playing hardball, but the leadership there is also showing that the lessons taught by the design flaws in the euro have sunk in.

This poses a problem for Salmond. With the Scots themselves uncertain about the viability (at least in the short term) of an independent Scotland, the prospect of losing the pound will have added to worries about the value of their savings, their future earnings, and (again, at least initially) the attractiveness of Scotland as an investment destination.

But it is also a clarifying moment. If a country is to be truly sovereign, it must have its own money. That’s part of the reason that Ireland broke the peg between the Irish and British pounds in the late 1970s (only to throw away that autonomy a couple of decades later by foolishly joining the euro). If an independent Scotland were to keep the pound (even unilaterally — as Panama does with the dollar) or, for that matter, trudge toward the euro (an assumption based on assumptions) what kind of independence would it really enjoy?

Could it be time for the Unicorn again?



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