Pro-independence Scots are misguided in wanting to retain the British pound

The SNP must run its own economy policy and create a sound currency

Share

The oddest thing about the great Scottish currency is why so many in the pro-independence camp actually want to retain the British pound. It is true, whatever the politicians say, that a currency union between Scotland and England could theoretically work – but only at vast cost and with permanent instability and, ironically, loss of Scottish sovereignty.

As the protracted traumas of the eurozone demonstrate all too graphically, without a binding fiscal and banking union– and, with it, large transfer payments between the participants – such an arrangement is forever unstable. In the single currency area, the Greeks and others resent being bullied by their paymaster Germany, an economy so large and successful that it inevitably dominates decision-making. With the English economy approximately 10 times larger than the Scottish one, the degree of influence that the Bank of England and the English Treasury would exert over Scottish economic policy would be similarly suffocating, and not necessarily in the Scottish interest – surely the very opposite of what free-minded Scots such as Alex Salmond seek.

At least now in the UK the Scottish send representatives to Westminster and, through them, hold UK ministers and the Bank of England to account. They also have a Secretary of State for Scotland in the Cabinet, and Scottish accents (albeit sometimes representing English constituencies) heard in government. That would all disappear.

Quite apart from that, the Scottish financial sector is simply too large, and therefore too risky, to admit into any currency union, even if a fiscal compact could be settled. The Scots would be free to use sterling or the euro or the US dollar – or the Vietnamese dong, for that matter – as a means of exchange and store of value, but they would have no influence over London’s interest rate policy or any right to use sterling assets to protect their banking sector if it ran into renewed problems.

The UK as a whole had barely sufficient money to rescue the Bank of Scotland and RBS as British institutions; as foreign, Scottish ones the English taxpayer would have no obligations to them. The English authorities might voluntarily lend Scotland sterling, but it would be a voluntary arrangement based on the need to protect a vital trading partner.

Fundamentally, if the English don’t want to let Scotland into sterling, whether rational or not, there is nothing that Edinburgh can do about it: the Scots can throw the Royal Navy’s nuclear subs out of Faslane if they wish – there are plenty of needy English ports happy to take them.

If all the SNP rhetoric about a proud new nation being able to chart its own course is to mean anything, it must mean the right to run its own economy policy and create a sound currency. Other smaller European nations have done so – Switzerland and Norway spring to mind. Then, again, if the Scots want to be full-hearted Europeans, as the SNP claims, then they could revert to their old policy of joining the euro – where they would have a seat on the European Central Bank’s decision-making committees and a voice in the EU Council of Ministers. Or they could build the Scottish pound as a currency as hard as Aberdonian granite. Sterling is simply a poor choice for Scotland. There are better options for all concerned.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Ruby On Rails Developer

£45000 - £50000 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: PHP Web Developer

£25000 - £35000 per annum: Recruitment Genius: This an exciting opportunity to...

Recruitment Genius: Lift Engineer

£28000 - £35000 per annum: Recruitment Genius: Lift Engineer is required to jo...

Recruitment Genius: 2nd Line IT Support Engineer

£24000 - £30000 per annum: Recruitment Genius: This company (Microsoft World W...

Day In a Page

Read Next
 

Daily catch-up: Old London Bridge; how to fight UKIP; and wolves

John Rentoul
Muslim men pray at the East London Mosque  

Sadly, it needs to be said again: being a Muslim is not a crime

Yasmin Alibhai Brown
In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

Iran is shifting from pariah to possible future policeman of the Gulf

Robert Fisk on our crisis with Iran
The young are the new poor: A third of young people pushed into poverty

The young are the new poor

Sharp increase in the number of under-25s living in poverty
Greens on the march: ‘We could be on the edge of something very big’

Greens on the march

‘We could be on the edge of something very big’
Revealed: the case against Bill Cosby - through the stories of his accusers

Revealed: the case against Bill Cosby

Through the stories of his accusers
Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

The Meaning of Mongol

Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

Kenyans still waiting for justice over Mau Mau uprising

Thousands join class action over Britain's role in the emergency
Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

The last Christians in Iraq

After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

Britain braced for Black Friday
Bill Cosby's persona goes from America's dad to date-rape drugs

From America's dad to date-rape drugs

Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
Clare Balding: 'Women's sport is kicking off at last'

Clare Balding: 'Women's sport is kicking off at last'

As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

Oh come, all ye multi-faithful

The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
Dr Charles Heatley: The GP off to do battle in the war against Ebola

The GP off to do battle in the war against Ebola

Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

Flogging vlogging

First video bloggers conquered YouTube. Now they want us to buy their books
Saturday Night Live vs The Daily Show: US channels wage comedy star wars

Saturday Night Live vs The Daily Show

US channels wage comedy star wars
When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

When is a wine made in Piedmont not a Piemonte wine?

When EU rules make Italian vineyards invisible