UK says independent Scotland would lose the pound

  

Scotland would not be able to use the pound as its currency if it voted to break from the United Kingdom later this year, the British minister for Scotland said yesterday (6 February), issuing the government's strongest warning on the subject yet.

As Scots prepare to vote on whether to stay in the UK on 18 September, Scottish nationalists are basing their post-independence economic plans on a currency union with Britain.

But the British government, which wants the Scottish public to vote against independence, has already said such a plan would be nearly unworkable.

"Independence means leaving the United Kingdom's monetary union," Secretary of State for Scotland Alistair Carmichael told Britain's parliament.

"The only way for Scotland to be sure of keeping the UK pound as it is now is to stay in the United Kingdom ... No one should vote for an independent Scotland on the basis that they will get to keep the UK pound sterling," he added.

Opinion polls show that around 42% of Scots plan to vote against independence and 29% in favour.

The British government says Scotland and the rest of Britain are better off together, while Scottish nationalists wants to end what they say are decades of economic mismanagement by London.

Much of the political debate over the referendum has so far focused on finance and currency-sharing arrangements.

Scottish nationalists say they could keep using the pound by ceding control of monetary policy to the Bank of England and agreeing broad fiscal guidelines. They believe both sides would benefit from a currency union.

"Scotland is the UK's second largest trading market. It would be absurd for Westminster (the British parliament) to stand in the way of protecting the benefits this brings to businesses and consumers in the rest of the UK," said Stewart Hosie, the Scottish National Party's treasury spokesman.

But Carmichael was one of several lawmakers who spoke in a debate on the future of Scotland to say that any currency-sharing arrangement would be unworkable.

Tough rules

Andrew Tyrie, head of an influential parliamentary committee that scrutinises financial policy, said any monetary union would need to be accompanied by a common fiscal policy to prevent a repeat of problems seen in the euro zone.

The euro zone currency bloc has undergone four years of political and financial turmoil after doubts about the ability of weaker states to repay their debts led to big losses for banks and meant several countries needed to be bailed out.

"A British monetary union would need something dramatically tougher than euro zone rules," Tyrie said. "So tough that on both sides of the border, if fully explained, I'm confident our respective electorates would not want it."

Tyrie said he doubted that Scots, if they did vote for independence, would relish the prospect of a British government picking over Scottish spending plans.

But in the absence of such a joint fiscal policy, British voters would resent bailing out Scottish banks if investors lost faith in Scotland's ability to balance its books, he said.

Tyrie urged both sides to rule out a currency union well in advance of the referendum, to allow Scots to make a fair choice.

"Not to do so, it seems to me, would be to deceive our respective electorates that there is some third way, some relatively painless option, enabling the Scots to imagine that they are fully in control of their own affairs and the rest of the UK to avoid large contingent obligations," he said.

Timeline: 
  • 18 Sept. 2014: Scottish independence referendum
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Comments

an european's picture

The right thing is to get rid of the Sterrling Pound and join the Euro currency

Edward Ramsbottom's picture

Leaving the pound behind would be the right thing to do. Every pound created by the Bank of England (a private company owned by Sir Evelyn De Rothschild) is lent to the government at 10% interest. This interest has to be paid back of course (even though it was never earned) and that's the root cause of why UK is so poor.

Scotland doesn't need to go independent and then wear this financial ball and chain; it can print its own Pound (it already does)but without this interest.

That simple step will enable Scotland to prosper at long last.

George Mc's picture

@ Edward Ramsbottom

The Bank of England has been an independent public organisation since 1998, wholly owned by the Treasury Solicitor on behalf of the government (UK), with independence in setting monetary policy. I think you are a bit out of touch.

I do agree, that if Scotland is to go Independent, then it makes no sense to then hand back economic control to the Bank of England. However, we need Mr Salmond to stop telling fairy tales, own up to the truth on this and many other things and let the people then decide.

Otto's picture

They can unilaterally adopt euro, like Montenegro did. Every currency is better than the doomed pound.

James 's picture

Well if it's not to be the UKIP pound sign floating on the saltyre I am quite sure the Scots will do the right thing and set up their own arrangements. After all with all the posturing going on, it is a fundamental axiom of money throughout history that it is the Banks that run this side of life. If the Bank of England won't do it then a Scottish Central Bank could do it. If in the last analysis UKIP were to win at the EU Parliamentary elections in England, I as a Scot would have an extra inducement to support independence in his area sa well. Who says the Euro is not a viable currency - and it's not run by governments! One thing is certain it's rather better at keeping its value than silly money run by a more isolated English banking system.

George Mc's picture

"They can unilaterally adopt Euro, like Montenegro did. Every currency is better than the doomed pound."

They could use any currency unilaterally, even the US dollar. However, statements like that show a delightful touch of economic naivety. Put simply they need a Central Bank to back them up so that they can borrow at decent rates. That is why the UK treasury would be reluctant without control of Scotlands spend, borrowing and control over Scottish based Banks.

Scotland can easily solve this by having their own Central Bank and Currency, the Scottish Pound or whatever. The Scottish Government knows this and are not confident they could get it past the electorate.

George Mc's picture

"Euro is not a viable currency - and it's not run by governments"

Correct, it is run by Government - Germany.

Richard's picture

"They can unilaterally adopt euro, like Montenegro did. Every currency is better than the doomed pound."

Yes, Scotland can adopt any currency it wants - but that's not the same as a currency union.

A country is free to adopt a currency for use - there are actually a few small countries like Ecuador that actually use the US dollar.

But this means they do not actually have a currency of their own - they are using the currency of a foreign country.

You may stop to think for a moment exactly why countries, even ones with massive problems and weak, fluctuating national currencies do not simply take on a major one like the euro or the dollar.

The reason is simple; a country that uses the currency of another sacrifices having any control at all over that currency. For example, Ecuador has no control whatever over the US dollar - they have no representation in either the Federal Reserve System or the US Treasury; neither of those bodies give any consideration to Ecuador when making their decisions, nor does the Federal Reserve act as lender of last resort for Ecuador and so on. In essence, Ecuador simply trails helplessly in the wake of the USA, subject to but with no influenc eover decisions that can have a radical effect on it's economy.

But the Scottish Nationalists do not propose an independent Scotland merely *use* the pound; they want a currency union - in other words, they want to set something like the eurozone up.

There are big problems with this, as the governor of the Bank of England pointed out in his recent speech.

In a currency union, each member would effectively end up as having to act as guarantor for the other; since Scotland's economy is far too small to ever bail out the rest of the UK (which is ten times bigger), the risk is entirely one way. Essentially, the SNP are saying they want the rest of the UK, which Scotland would have just voted to separate from, to act as it's financial guarantor.

Not only is it hard to see why this would be beneficial to the rest of the UK, it is impossible to see how it could be achieved politically; the English are hardly going to be in a mood to accomodate the wishes of the just-departed Scotland. It is like telling you rpartner you want a divorce, but retain the family credit card, just in case.

Also, as the eurozone demonstrates, if you want a currency union to actually work, you need MORE integration, not LESS. The absurdity is that the eurozone will invariably move towards economic union, which democracy will demand political union; the Scottish Nationalists want to take sterling and do the reverse, turning it into a copy of the eurozone as it is now.

That is patently an absurdity. At the very least, to even consider a currency union, both sides are going to have to agree on being able to oversee each other's finances - for example, they would both have to have a veto on each other's annual budgets to make sure one side did not run up excessive debts or somesuch. It is almost certain that the rest of the UK would insist on such conditions.

Given the disparity of the two partners, the "sterling zone" would be completely dominated by the rest of the UK - Scotland would be very much a junior partner. It would constantly get outvoted at the Bank of England, for example.

So in essence, Scotland would be "independent" but immediately sign over control of it;s currency to what would now be a foreign country which would also have things like a power of veto over it's national budget. Eventually, thw two sides would be driven towards re-creating the Union that Scotland had voted to leave, anything else would be unworkable or democratically unacceptable.

The SNP say that that Scotland will keep the pound, yet they have not even bothered to ask whether the rest of the Uk would agree to it. They would be in no position to bargain either: not only would they be by far the smaller of the two negotiating sides, they would be faced with either accepting whatever conditions the rUK wanted to place on a deal, or creating their own currency. They could not join the euro, even if they wanted to.

It is also worth noting that Alex Salmond in 1999 described the pound as "a millstone around the neck of Scotland" and wanted to join the euro.

He stopped talking about that though - at about the same time he stopped talking about his "Celtic Arc of Prosperity".

James 's picture

Well now a currency union is not the same as the banking system operating in a commercial sense. Ever since the times Assiento when Genoan bankers ran the the affairs of state of the Spanish empire, the functions of banks have been distinct from the machinery of the state. Clearly even in more modern times Banks have been separate from the states in which they operated. Who says the refusal of the UK government to allow Scottish banks to operate in the financial markets is realistic? Judging by the mess of the UK banking system and the extreme remedy of the UK government in being forced to nationalize the major JS banks because each one was judged “too big to fail" it is a farcical and risible excuse to use threats to Scotland over using or not using sterling with the UK experience on Banks! In the single market, anyhow, there is a clear alternative. The UK “computer says no" gives the Potentially rebellious Scots every excuse to join the more solid and reliable euro should they wish to do so. When the Scots are still familiar with a range of own brand banknotes, variety is no obstacle to intelligent solutions. Why is the Old Lady “of needle” so involved in looking into her own navel? That's very possibly the consequence of being in effect still very much in the pocket of Westminster, and not in the commercial world. I fear this one red herring will continue to swim...in the meanwhile how many more bonds are to be bought up with much BoE printing of sterling paper?

George Mc's picture

@ James

James is a very British name. Your English is, well, a tad continental.

Are you really uk-sceptik?

Richard's picture

James, two points:

If what you say is true, why are the Scottish National Party so desperat to keep the pound in a currency union with the rest of the UK?

More importantly, there is no chance whatever of their joining the euro if the rest of the UK refuses a currency union. For one thing, the Nationalists have made it clear they want to retain the UK opt-out (whether they will be able to is a different matter, since President Barroso has indicated they will be a new member state and thus committed to eventual euro membership)

However, leaving the political question aside, there is no possibility whatever of Scotland leaving the UK and joining the euro quickly. There is a specific process a country must go through to join the euro - and Scotland meets none of them, nor will it ever unless it first establishes it's own currency.

This is because even if Scotland "inherited" the pound, that currency does not meet any of the convergence critera - things like government debts to GDP ratios, for example. Moreover, the pound will never meet one of them, and that is a sustained membership of the exchange rate mechanism. The UK government has stated it has no intention whatever of joining the euro and thus never the ERM, therefore, Scotland's pound never will either.

So to join the euro, Scotland would need to leave the pound, establish it's own currency and then meet the convergence criteria with that currency. Simply establishing it's own currency would take years, and then there would be many more years to satisfy the convergence criteria within it.

Unfortunately, your post sounds like exactly the type of fantasy projected by the Nationalists in which everyone else arranges their affairs to the convenience of Scotland.

The UK Chancellor has just made an important speech that clear states: the rest of the UK will simply NOT AGREE to a currency union with Scotland. It is not in our interests to turn the pound into a copy of the eurozone with all it's flaws, to remove those flaws would mean doing things that are politically unacceptable (for example, both sides would need ot have oversight and powers to veto each other's budgets) and perhaps most of all....the 53 million people that form the rest of the UK are simply not going to tolerate such an arrangement to satisfy the convenience of 5 million Scots who would have just, in essence, voted to walk out.

It is like a divorce in which one person says they can no longer tolerate living with the family - but they want to walk away keeping the credit card.

It is not going to happen.

IanS's picture

A Scottish bank paying one percent better interest on my savings would get my support. This is likely to draw in huge amounts of investment money from all over UK - I think it would be a winner.

JJ's picture

To anyone from outside Scotland who's reading this with any degree of faith in what George Osborne is saying: be warned; this is just pre-referendum posturing.

Nobody with any sense believes a word the UK Govt says any more. They've said that we wouldn't be in the EU, not in NATO, there would be border fences along the Tweed... I've even seen someone suggest that there would be no credit cards in an independent Scotland.

From a Scottish perspective, we're getting used to the daily barrage of antipathy from our 'friends' in Whitehall but people are beginning to take these threats less and less seriously.

Look at the bookmakers. Their odds tell us it's near-certain that Scotland will still use the pound after independence. In other words: in the real world no-one believes a word Osborne says...

James 's picture

Thanks Richard,
that's a clear and informed statement you have made. Unfortunately it does not account for the political developments that a possible Scottish independence would unleash. Post war history shows how concepts of nationalism have in Europe at least and in general been subsumed into a morphing of sovereignties and expedience towards pragmatic outcomes. A good friend of mine expressed it well "the Euro should have collapsed but these politicians are keeping it alive against all logic" as he picked up the point that nowadays political will has a strong counterbalance to the free reign of markets. When you look at the sell by date of the English political scene such evolution has happened already: the Empire went, the Commonweals (like EFTA a residual element) Ireland too in its way, the UK was all given devolution except for England alone, and Westminster behaves as though historical forces do not operate in that centrifugal manner in the UK (in this respect are they as pro European as that?). The current situation is more fluid than some commentators have suggested. Going to Scotland to make a well meaning speech by the Chancellor (addressing England mainly I think) supported by Labour and the LibDems, can also be a positive help to those who see things differently. As Tory, given the reception the English nationalist Farrage was given after his intervention in Scotland, it may be perverse and also counterproductive this time round to the English establishment. The spirit in the suppressed quattrain of the National Anthem may still be relevant, so we should do everything not "to rial the rebellious Scot"!
History tells us, however, that a good warning is not always heeded.

Richard's picture

"A Scottish bank paying one percent better interest on my savings would get my support. This is likely to draw in huge amounts of investment money from all over UK - I think it would be a winner."

Why would Scottish banks pay higher interest? The only reason they would do that is if they either needed to attract capital in the form of deposits - which is unlikely - or scotland had it's own currency, with it's own central bank that had in turn raised interest rates substantially above those set by the Bank of England for the rUK.

But this would mean you were willing to accept the risk of putting your money in the bank of a foreign country, denominated in a foreign currency. There would also be tax implications - how would the interest on your savings be taxed?

For most people, the inconvenience and risk associated with putting their savings into foreign bank deposits mean they simply don't do it.

Even in the eurozone, which is a genuine currency union, and with European rules that mean foreign investor deposits enjoy the same cover from national deposit insurance schemes as those of domestic deposits, the practise in uncommon. It is even rarer for persons from non-euro countries to put their deposits in euros in eurozone banks, or vice versa.

It is more common in the United States to place depostis in out-of-state banks, but that is because the USA operates as, and mor eimportantly is perceived by it;s citizens to be, one giant domestic system. People in Idaho do not regard a Texam bank as a foreign one, whereas people in say Belgium do regard a German bank as foreign - let alone a bank in say Poland, outside of the eurozone.

In or out 's picture

I don't think Scotland should keep the pound, if they go bankrupt, we would have to bail them out.

George Mc's picture

Time to ask Mr Salmond what he has in mind for plan 'B'.

Any idiot would have seen this one coming and had a back up plan.

Has he been wrong footed because like the rest of us he probably did not expect it until much nearer the referendum?

No doubt while he works out what to do, his attack dogs will be accusing George Osborne, Danny Alexander and Ed Balls of bulling

Perhaps he may want to go back to his well rehearsed statement; Independence within the EU, Oh hang on that's gone belly up as well! Maybe the 'Arc of prosperity' will ride to our rescue!

James 's picture

Hang on...was Osborn briefed by a dispassionate advisor in the Treasury or was he the mouthpiece of a determined official aware of the impact of Independence on his and colleagues jobs? I think we need to be told. Perhaps with all the expertise available in the Financial circles in Edinburg it will not be long before that English fox gets shot.

Richard's picture

What possible effect could Scottish independence have on the employment status of senior officials at the Treasury?

THe only likely effect is the loss of jobs in Scotland, given that a disproportionately high level of public sector employment within the UK is located within Scotland. Upon independence, you own national public services will require far fewer staff, so all the jobs within Scotland related to activities that actually take place in the UK will relocate to the UK.

By "financial expertise in Edinburgh shooting the English fox", I presume the SNP is now frenetically attempting to find a credible voice willing to say that an independent Scotland could in some fashion compel the equally independent rUK into a monetary union - or (and even less likely) someone willing to say that Scotland's first act upon independence and establishing it's own currency, namely, reneging on it;s share of debt, is in some fashion wise rather than an act of economic folly destined to render Scotland a financial and political pariah.

Is the financial wisdom in Edinburgh that which gave us Royal Bank of Scotland? (ah, I forget, that is of course a "UK" bank as it is not seen as a desirable asset by the SNP). The bank run by Fred the Shred who got such a nice letter from a certain Mr Salmond filled with glowing praise and support for his policies. Signed "yours, for Scotland" as I recall. I;m sure it's still available online somwhere...

James 's picture

Thanks, now I know that it's all about loss of London's political influence and not about the impossibility of continued use of the pund esterling...after a possible Aye vote. I suppose the Scots are entitled to vote as they please, and heaping spurious monetary concerns worthy of Tarot card games on them will not be appreciated by the rest of us living in a potentially diminished England (in or out of Europe?).
Has UKIP also added its support to Tory, Labour and Lib Dem concerns? Should we worry?

George Mc's picture

@ JJ

"Look at the bookmakers. Their odds tell us it's near-certain that Scotland will still use the pound after independence. In other words: in the real world no-one believes a word Osborne says..."

IF, Scotland votes for Independence you may be right. Scotland could use the Pound, Euro or Dollar.
You will not however, have the Bank of England as lender of last resort.

Richard's picture

James, to be honest, you're talking nonsense. First, you're pinning your hopes on what people at bookmakers are making bets on - when the three political parties, one or more of which will govern the rUK after a possible separation, have all said otherwise? Conservatives, Labour the and LibDems have all said - if they are governing the rUK, they will not agree to a currency union with Scotland.

And Mr Salmond and Ms Sturgeon may ASSERT otherwise all they like - a currency union means both sides have to agree to it, and the rUK has said quite clearly it won't.

Mt Osborne's speech was superb - calmly laying out the facts without emotional rhetoric. A currency union is not in the interests of the rUK, nor is it politcally acceptable.

In order to work, both sides would need to agree to at minimum a banking union (where either side would be willing to bail out the other's banks if they got into trouble) and fiscal oversight (so both sides would have a right to examine and if necessary veto each other's budgets). Otherwise we would just get all the problems that the eurozone has had - a currency union but with countries able to do whatever they liked within it. Why would the rUK taxpayer be willing to enter into an agreement to bail out the banks of a foreign country, a country that has effectively just stuck two fingers up at them? Why would either side agree to powers over each other's budgets? Why would the rUk agree to the Bank of England acting as lender of last resort?

Giving the size of the two sides - the rUk is ten times the size of Scotland - there is no chance Scotland would ever be called upon to bail it out as it is too small - so the risk is all one way.

A currency union would need to assure financial markets that it was stable and both sides were committed to it. But Scotland would have show it is ready to walk out of agreements that don;t suit it. The SNP has already said they would be quite happy to walk out of sterling and into the euro if that looked better. So the currency union would instantly be attacked by financial markets, the same way they attacked the eurozone, trying to drive Greece and Portugal out of it.

Moreover, due to the size difference, it is clear that the rUk would totally dominate the currency union, so Scotland's interest rates and monetary policy would be set by a foreign country - it would just get constantly outvoted at the Bank of England.

How "independent" is that?

Sure, Scotland can *use* the pound as an exchangable currency - like Panama uses the dollar.

But like Panama, it woul djust have to accept whatever that country did with the currency and would not get any help.

The Fed and US Treasury don;t consider Panama when they make fiscal policy for the dollar, and Panama has no access to the Federal Reserve as lender of last resort, the USA sure as hell wouldn't bail their banks etc.

The SNP are just trying to have their cake and eat it. They want to walk out of the UK but to keep the benefits that happen to suit them. They want to stick two fingers up to the rest of us, but want us at the same time to organise our economy and currency to suit them.

The fact they they have no reasoned counter argument to Osborne's speech but resorted to name calling, and threats to default on their share of the debt, shows which side is being rational and which isn't.

Any sensible party planning to govern an independent Scotland would have a Plan B on currency - they don;t, they just presume and assert the rUk will give them what they want.

Lastly, it's nice of Sturgeon to be so worried about "English businesses" being hurt by Scotland and rUk having two separate currencies. But England does only 10% of it;s trade with Scotland (and 20% with the USA, 40% with the eurozone). Scotland does 70% of it;s trade with England.

So it's obvious whhat she is *really* worried about, and equally obvious that she knows full well which side has the stronger hand to play. And it's not hers.

A Londoner's picture

I am surprised that there has been no mention of the Irish example post the 1921 Treaty. The Free State and then the Republic continued to use sterling post independence for more than 50 years. However, as I understand it there was no formal currency union and Ireland had to accept whatever interest rates were set in London. Moreover, the BOE did not stand behind Irish banks.

Given that the rUK will not accept a currency union it sounds as though, post independence, Scotland will face higher long term borrowing costs and a constrained fiscal situation.

George Mc's picture

@ A Londoner

A very good example indeed. In fact if I am right the Irish economy was not great until they joined the EU and got loads of money thrown at them. They then joined the Euro and the fallout from that when the financial crisis started is exactly what the UK treasury wants to avoid happening to the £pound.

Richard's picture

Mor eprecisely, after independence in 1922 Irish banks continued to issue notes that were effectively backed by the bank of England; not until 1926 did Ireland begin to issue it's own coinage (but not notes), that were known as tokens. This was followed in 1927 by the establishment of the Irish Currency Commission that issued notes that coul dbe swapped for pound sterling notes; in essence, the Irish pound, known as the punt, came into existance. However, it was pegged to the British sterling for fifty years following that - Ireland did not even establish a central bank until 1937. Ireland jointed the Exchange Rate Mechanism and later the euro - however, it is quite likely that despite the increased volatility of the pound (which for much of the punt's existance had been one of the world's important reserve currencies) it is quite possible that the punt would to this day still be pegged to the pound, particularly given the importance of Irish-UK trade.

One thing to note from history: had Ireland not been independent, but instead part of the United Kingdom, it would not have had the extreme problems of it's banks.

That is because the UK, as a large state, could afford to bail out it's part of it;s banking sector; the Irish economy was simply not large enough, and they had to look to European partners instead who placed their own conditions.

As part of the UK, Scotland's banks (and they are Scottish, being registered in Edinburgh and had Scotland been independent at the time, would have been Scotland's problem) were backed unreservedly by the UK's 63 million population.

Had Scotland been independent, those banks could not have been bailed out - Scotland is not a large enough economy.

This is, of course, why the National Party are so desperately keen on a currency union - in a time of crisis, the rest of the UK taxpayers would be on the hook for Scottish banks and Scottish debts (and hypothetically, vice-versa, but since Scotland is only one tenth the size of the rUK, it would never actually be called upon).

This shows that in a currency union, most of the benefits accrues to Scotland whilst most of the risks accrue to the rest of the UK.

And THAT'S why the Scottish National Party want it so badly, and also why the rest of the UK has just very firmyl, and rightly, said no such arrangement will take place.

James 's picture

Concerning borrowing rates at more advantageous rates (and provided you can pay the principal back) notwistanding currency exchange risks, business trading in the single market still would finf in a Scottish situation advantage in borrowing in Euro particularly if they are dependent as most Scots high value goods on that market.

Richard's picture

Quite. However, Scotland's borrowing rates are going to be more profoundly affected by the market view of the risk of lending to them.

Scotland as a new nation would have no credit history - it certainly could not count on inheriting the UK's long history of never defaulting on debt. Of course, should scotland elect to default on it;s share of UK debt upon separation, this would be catastrophic (it is the precise reason why Greece did not simply walk out of the euro, recreate the drachma and default). Bankrupts simply don;t get loans, except from sharks who charge punitive rates.

Factored into this would be the huge size of Scotland's financial sector, which at 12 times it;s GDP is one of the largest in Europe. Naturally, the Uk financial sector is also very large, but there is a cushioning effect by the UK simply being a relatively large economy.

Also, Scotland would be much more dependent on revenues from hydrocarbon production (namely gas and oil). This is of course an asset to the overall UK economy but relatively small (much smaller than the City is, for example). At one tenth the size Scotland would be far more reliant on it, and could be aversely affected by changes in the international oil price, or a fluctuation of their currency (whateve rit may be) against the US dollar, in which oil is traded. This is a problem that plagues Venezuela.

No one has ever said Scotland couldn;t go it alone, Of course they could. Just as the UK could survive outside of the EU.

But the voters need to be fully informed of the inherent risks and disadvantages in doing so. The SNP are presenting a fantasy where Scotland gets to cherry picks things it likes from the UK, EU, NATO etc but leave behind that which it doesn;t want, a delusion in which everything changes but at the same time, everything stays the same.

james's picture

Government borrowing is one thing. The world works on commercial transactions. Were I a fine quality single Malt Whiskey producer and sought finance for expanding sales I am sure I could raise finance at most advantageous rates whether in the UK, Ireland or Scotland. If the Estonians and Latvians can do it so can Scotland. Seen from Luxemburg the situation is extremely clear, tax regimes and permissive company law is good for business...and for the state.

Richard's picture

Goverment borrowing is much more important though. I keep on seeing this sort of comment "ah but we have whiskey/oil/wind"

On a different note, yet another wheel comes off the SNP's case today: speaking on the Andre Marr show today, President Barrosso said:

"I want to be absolutely clear...in case there is a new country, a new state, coming out of a current member state it will have to apply.

"And - is very important - accession to the European Union will have to be approved by all other member states of the European Union.

Of course it will be extremely difficult to get the approval of all the other member states to have a new member coming from one member state... I believe it's going to be extremely difficult, if not impossible, a new member state coming out of one of our countries getting the agreement of the others."

The SNP White Paper is increasingly exposed as a fantasy, making promises they have no power to keep. Their position that Scotland will leave the UK but stay in the EU at the same time and keep all it's opt-outs and the rebate is rubbish. Barroso is the head of the body that makes the final legal decision.

So I wonder when Salmond will start calling this "the EU bullying Scotland"

LOL LOL

A Londoner's picture

It seems to me that the Nats cannot lose. Even in the likely event of a No vote they will have succeeded in reinforcing Scottish identity.

I confess that (apart from the weather) I am jealous of the Scots. English and Scots submerged their identities into the Empire but they have managed to revive their's whilst we English have not.

I wonder if our grumpiness towards the EU is a product of an English identity crisis. The Scots seemed to have moved beyond Empire but we English seem stuck - we cannot revive our former Imperial glory but seem unable to shed the pretensions it bred.

James 's picture

"Andre Marr (sic) show today, President Barrosso (sic)" would say that would they not? With Westminster on the ropes who blames calling even Barroso to help?

James 's picture

A Londoner - you have hit the nail on the head!

IanS's picture

Was Barroso telling the Scots that there is no way that they could join the EU as a separate country, because all current members would need to approve, and he had already been told that the UK would not approve? So Scotland has to wait until UKIP forces the UK to withdraw before it can join! What irony!

Otto's picture

IanS

Actually, the UK will want badly the membership of Scotland in the EU. Because it's the only way the UK and independent Scotland can have open borders. Don't forget: every EU member must have true borders (custom-house etc) with non-members.

George Mc's picture

@ A Londoner,

Not really sure that I follow your logic or reasoning.

As a scot I can assure you we have never be shy of pushing or recognising our identity!
I honestly doubt if anyone could argue that.

As a Londoner I am assuming that you may you may be suffering an identity crisis because of the mixed population from all over the world and from all of the UK. London is a huge melting pot, that's why I left it.

However in my travels around the UK, the North East, Yorkshire, Midlands and West Country I find that
they are usually quite proud of their identity.

You surprise me in your assertions that we are struggling to reassert our former Imperial glories. In my view that has long gone with very few adults left who can remember what it was like to have an Empire. The Empire was largely gone after WWII so to have any recollection of it you would need to be in your 80's or 90's.

Hear is a possible forecast which might happend.
If Scotland does not vote for Independence, I think it is almost inevitable that we will eventually
have Devolution Max. Become more part of a Federal UK with the North West, North East, Yorkshire etc.
having devolved administrations. That would leave Westminster to deal with Defence, Foreign Policy and
Monetary Policy.

Richard's picture

The idea that London have somehow enlisted President Barrosa is utterly laughable. It would for one thing a complete violation of his oath of office, which is political neutrality and to serve the interests of the whole European Union, not the interests of any one state (including the one he originates from). In any case, even assuming that was not so, why on Earth would Mr Barroso submit to London's wishes?

Mr Barroso made it clear, he is not interfering in the right of the Scottish people to decide their future, nor is he interfering in the political debate by issuing any opinion as to whether he personally regards it as positive or negative.

What he has done, however is to make it clear that:

a) A part of a Member State that leaves that Member State leaves the EU at the same time (which is logical) and becomes a new country (which is logical, and is, in any case, surely what "independence" is all about anyway)

b) a new country wishing to be part of the EU must go through the normal accession process, in the same way that all other countries have done or are doing

c) it might be extremely difficult for an independent Scotland to gain the unanimous approval of the existing 28 Member States. He did not say why but illustrated the difficulties that Kosova has encountered, whose accession is being blocked by Member States with their own agendas...who are likely to block Scotland for the same reason. We know who the obvious one is, but there are others.

It seems to me that the Nationalists do not like to hear inconvenient truths, and upon hearing them resort to name calling and repeating their assertions which they have, in fact, no power to grant because that power lies with a third party.

In short, the SNP view that Scotland will enjoy a seamless transition from independence to full EU membership in a mere 18 months, retaining all of it's current benefits and exceptions (opt-outs from the euro and Schengen, a share of the UK rebate) is exposed as a fantasy.

In reality, if Scotland exist the UK it will exit the EU at the same time - and whilst transitional arrangements may be on offer, it will have to go through the normal accession process (which any existing State can stop by simply abstaining, no actual veto is necessary) - this has always taken years. Also, it is most unlikely that the EU will be giving out exceptions to core EU projects like the euro or Schengen, no accession country has been offered that. If they did every accession candidate would be seeking special treatment.

The SNP also seem to think that Scotland is so vital to the Union and regarded with such favour that the EU will do almost anything at their bidding to keep them in.

The reality is, Scotland is too small to matter very much to the rest of the EU either way - it is only 1% of it. The other 99% will continue as normal either way.

It is to be noted that at no time has the rest of the EU indicated it is prepared to offer the whole UK a special deal - either because the UK threatents to exist, or actually exits. And the UK is one of thelagrest Member States, comprising 10% of the EU.

As I said, the SNP approach to inconvenient truths is to descend to name calling, personal insults directed at Mr Barroso, claims of being "bullied" and generally ignoring what has been said and claiming that once there is a Yes vote everyone else will change their minds and do it all Scotland's way.

They would do well to remember that the EU Commission, as guardian of the Treaties, is the body that will actually decide on the matter.

It is the Commission, not Alex Salmond, who will decide on Scotland's status should it separate from the UK, in regard of the EU at least.

Foot stamping and temper tantrums will not change this.

Williams Connel's picture

Needed deposit guarantee! Request thanks to deposit insurance your rental deposit at the bank back! Apply for a rent deposit guarantee and you can use your already deposited bail money are freely available. This gives you unlimited access to your cash, which otherwise is blocked on the rent deposit.

James 's picture

The latest Cameron pronouncements say in effect "You can't have the pound; but we will have had YOUR oil" Is such attitude not a challenge for more Scots voters to vote for independence?
Or is Camereron 'nae haverin'?

Richard's picture

James, you don't half talk nonsense sometimes.

In regard of the pound, the three parties one or more of which will be in government at the time of any possible negotiations will be taking place have simple stated that the rest of the Uk will NOT agree to a currency union with an independent Scotland.

A currency union cannot happen unless both sides agree to it. Scotland cannot decide on the rest of the UK's behalf, it is a matter which both equally sovereign countries have to agree to create.

The rUk won't for reasons which have been more than adequately explained many times over.

Scotland seems to think that the Edinburgh Agreement means "everyone else will give us everything we want on our terms". It doesn't.

The rUK will have as much right to look after it's own interests and every right to refuse agreements not in it's own interests. Independence is not a one-way street!

Why would the rest of the Uk even consider agreeing to it?

Scotland is saying "I no longer want to live with you, I am fed up with being abused, I am divorcing you. Then once I have done that, I want us to get engaged again on terms that suit me so that you can guarantee my new mortgage and credit card in case things go wrong. If you say no you're being a bully!"

Ridiculous.

As to Cameron saying he wants the oil, where did you get that from? Leaving aside the argument that if the pound is a "shared UK asset" and therefore so is "the oil" and therefore the rUk is entitled to it's 92% of it..

All Cameron has said is that the North Sea industries are more likely to be successful if they operate in the larger Uk economy.

North Sea oil is already in a state of managed decline, output has been steadily dropping for a decade and the companies are investing record amounts into it (thanks at least in part to tax-breaks funded by the UK Treasury). In other words, it is costing more and more to get less and less out.

This is called diminishing returns, it can be partly compensated for by things like tax-breaks, and these are more easily afforded by a large economy than a small one.

It seems to me that some Scots have the typical reaction to hearing inconvenient truths or things they do not like and do not want to hear (such as "you cannot have your cake and eat it")

The five stages are Denial, Anger, Bargaining, Depression and Acceptance.

I suspect we are mostly in the Denial "contrary to all the evidence, we WILL have a currency union because we say so) and Anger ("how dare they say that" English Tory Toffs Thatcher Bullying etc) stages with a little Bargaining ("do what we want or we will default")

I guess Depression and Acceptance will soon appear - yes, Osborne and Barroso really meant what they said and are in the positions to make it so. The SNP's "plan" is all based on cobblers and they have no fall back position following their assertions about what other countries will do turn out to be false.

A Londoner's picture

It seems to me that the Scots Nats are not really factoring in the adverse reaction which will occur in the rUK in the event of a Yes vote.

At the moment, my impression is that English public opinion is well disposed towards Scotland. However, in the event of a Yes vote I suspect this will change.

I think that will be particularly so since the No side appear to have the strongest economic arguments. a) The need to keep the pound but without a formal currency union is going to raise borrowing costs, b) North Sea oil is a declining asset and c) Scottish pensions are going to become an increasing problem.

A Yes vote will be interpreted in England as pure nationalism which often seems to be manifested as being anti-England. Alex Salmond has not been the overtly anti-English but it seems to be a strong element.

In the event of a Yes vote English public opinion will expect the rUK negotiators to be hard-nosed. Scotland has cards to play particularly Faslane but the rUK is by far the bigger side. Remember Flodden as well as Bannockburn!

George Mc's picture

@ A Londoner,

I would largely agree with you. If there is a YES vote come September, it will not end well. The divorce will be acrimonious.

The only real bargaining chip that the SNP have is around Coulport and Faslane.

The sad thing is that if Independence were to come about and after, say 5 years, things were not going well. the young, mobile, skilled and educated will be off, including SNP supporters.

London will love it as the financial sector in Scotland is about twelve times Scotland's GDP. With no lender of last resort they will be off.