Joining the Euro for idiots
Britain and Scotland’s journalists have set a high bar for stupid today, but this might take the biscuit. Almost every half-cut hack and so-called expert who talks about the currency options open to Scotland casually mentions that Scotland “could join the Euro”. Whether such people are doing so through ignorance of the rules of the Eurozone or through malicious intent is for observers to decide, but either way, this particular piece of witless misinformation just will not go away.
So, let’s make it nice and easy for all the lazy people who can’t be bothered Googling “Eurozone Convergence Criteria”, shall we?
The Eurozone Convergence Criteria (aka the Maastricht Criteria, as they were defined by the Maastricht Treaty in 1994) state five conditions that a country must fulfil before it is allowed entry into the Eurozone. These are:
1. Price stability – the country’s Consumer Price Inflation (HICP) rate must not be more than 1.5% above the rate of the three best performing Eurozone member states.
2. Sound public finances – the government’s deficit must not be higher than 3% of GDP.
3. Sustainable public finances – the government’s debt must not be higher than 60% of GDP.
4. Durability of convergence – the country’s long-term interest rate must not be more than 2% above the rate of the three best performing Eurozone member states in terms of price stability.
5. Exchange rate stability – the country’s existing currency must have been part of ERM II (Exchange Rate Mechanism II) for at least 2 years without severe tensions.
Now, let’s just think about how many of those conditions Scotland would fulfil on day one of independence in March 2016, because unless we met all five in full on Day 1 of independence, then the Euro cannot be anything other than a medium-term solution for Scotland’s currency.
Whether Scotland could meet any of the first four as a brand new independent country is open to debate, quite simply because we’ll have a lack of history outside the UK to prove it. But let’s be generous for the sake of argument.
If Scotland was trying to join the Eurozone, it implies Westminster has rejected a currency union, which in turn implies we’ve said “Enjoy paying off the UK’s debt by yourself, then, chumps”. (If we’ve taken on a proportionate share of the debt, we’re instantly buggered on 3 and possibly 2.)
So Scotland would be starting with government debt equal to 0% of GDP. We’ll also have a budget surplus, never mind a 3% deficit. We could even argue that whatever the UK’s long-term interest rate is, that’s Scotland’s long-term interest rate too.
(This is the only one of the Maastricht Criteria the UK currently meets – even Bulgaria is closer to qualifying than we are. Who needs an explicit Euro veto when you can just put Alistair Darling and George Osborne in charge of your economy?)
So Scotland could maybe start off with criteria 2, 3 and 4 ticked off. Let’s also, again for the sake of argument, assume that Scotland could argue that it meets the first criteria, because the UK’s HICP inflation rate isn’t that far off the required rate at the moment, and we’re talking about 2016 rather than 2014. So with a following wind that’s four out of five potentially in the bag.
But the last of the five – essentially the last step before any country can join the Eurozone – is membership of ERM II for a minimum of two years. Now, unless the current UK government has a complete reversal in policy towards the Euro pretty much right now, Scotland cannot possibly be said to have been in ERM II for two years on independence day, because right up until then Scotland’s currency will have been Sterling, and so won’t have been in ERM II for two minutes, never mind two years.
There’s simply no way the EU would bend this rule either, as Sweden’s continued policy of failing this rule on purpose to give a de facto Euro opt-out shows. So just as Scotland cannot be forced to join the Euro, we are also prevented from joining it voluntarily – just like Bulgaria, Croatia, Hungary, Lithuania, Poland and Romania, all of whom want to join the Euro, but can’t because they don’t fulfil the five criteria (Sweden don’t want to, and the Czechs can’t seem to decide).
There is, of course, one other requirement which is not in the Maastricht Criteria, because to be bound by the Maastricht Criteria you must have one fundamental quality first – being a member of the EU (duh).
So every person who talks of Scotland “joining the Euro” is implicitly confirming that they believe Scotland would be a full member of the EU on day one of independence. No EU membership, no Eurozone entry. (Unless you think Scotland is a micro-state like Monaco, San Marino and the Vatican City.)
There is one way Scotland could use the Euro without meeting the Maastricht Criteria. It’s the same way Montenegro are able to use the Euro, despite not being in the EU and not meeting the criteria. That is to use the Euro without permission, in the same way Scotland can use Sterling if it wants to, because the Euro is a fully convertible currency. (Of course, that’s not joining the Euro, that’s using the Euro.)
But if this was the option that journalists were referring to, then why limit our options to the Euro? Why not include the Danish, Norwegian or Swedish Kroner? The Swiss Franc? The Canadian Dollar, even? More to the point, if Scotland goes down the road of using a fully convertible currency without permission, then it’d be absurd and pointless to use anything but Sterling.
So bearing all that in mind, is there any chance that everyone could shut up until they have at least the vaguest beginnings of a clue what the hell they’re talking about? Ta.
Meeeoooowww !
Was that was aimed a Douglas ‘Doh’ Fraser ?
Glad you cleared that up, Stu.
It was getting on my t!ts listening to those clowns talking about how Scotland could/should join the Euro.
Come on the whole of BBC Scotland, as Delia Smith remarked; “Let’s be havin’ you.” How many times do you idiots need to be told that we cannot be forced to join the Euro? But you already know this, and you are on full arse protection mode for the British state and establishment. Please get fuckin’ real. And that goes for you too Southerner! BBC Reporting Disinformation are a rancid festering boil in Scotland. Sick fed up of them and their lies. Apologies for the rant everyone…
Actually Douglas Daniel
As the EU is a political construct, and has a penchant for ignoring or bending them out of shape any of its rules it deems to merit, in the aims of political expediency, perhaps the 2 year rule could be bent if necessary too?
Follow the money.
As a confirmed idiot, to which you refer…could you tell me why the UK have not taken up the Euro now? I thought we just refused to use it. Didn’t think it was compulsory.
This is what i’ve said from the start of the currency debate. It’s unbelievable how so called ‘experts’ can continue to proclaim that joining the euro is an immediate option. The euro may well prove to be a good option down the line. This could be in a matter of decades after/if the eurozone has returned to substantial economic growth and after the european institutions have become more robust.
In the meantime I couldn’t give a hoot what currency my bank account is in provided we get to run our own affairs 🙂
I’ve been trying to explain this in simple terms to No voters since last year. They still have a hard time with the concept, and continue to say we’d be forced to take the Euro once we rejoin the EU.
Might be better off explaining it to the dog, at least she might understand.
Thanks Stu I hope the journo’s read this and hope the message gets through. Saves me shouting at the telly.I can now move on to my next exasperation . the underlying threat that they will dispute our oil fields. grrr
“As a confirmed idiot, to which you refer…could you tell me why the UK have not taken up the Euro now? I thought we just refused to use it. Didn’t think it was compulsory.”
It isn’t compulsory in any meaningful sense, and the UK has an opt-out anyway.
“Glad you cleared that up, Stu.”
“Doug”.
Rev: On BBC Radio 4 news today (just before the 19.00 broadcasting of the Archers) claimed that SNPs plan B was the Euro! I think I heard them correctly ( I was doing the dishes at the time)maybe wortt a listen? I would double check myself but I cant access iplayer here.
Susan
Some of the older EU members obtained an opt out on the Euro, the UK being one of them. However, as the UK falls on 1 through to 3 it wouldn’t get in if it wanted to at the moment. It minimally takes two years to join and these days in practice much longer. 10 years ago Scotland if independent may have been fast tracked in as they were keen to expand which is why Greece and Portugal pretty much cooked the figures and got in quickly. The ECB will not make the same mistake again. Joining the Euro is not a short term option. Therefore Scotland must consider other options a Sterling zone being one. Our own currency is another.
Thank you. I doubt that any of the unionist sycophants that appeared today on Twitter will pay even the blindest bit of attention to the facts.
Another thing that was apparent today was the heavy talk about Scotland taking on it’s share of the debt. Not a single mention of a fair share of assets. Surely the portion of assets due to Scotland, built up over the last 300 years of joint endeavour would balance out this debt anyway?
Anyway, 3 or 4 personal new YESs today – first hand movers from Don’t Know.
@Susan S
We’re all idiots; nobody knows everything about every conceivable subject.
Yes, the UK government negotiated an opt-out on the Euro, for the same reason they are saying no to a currency union with iScotland: it would wreck the [r]UK economy.
I know everyone is sick of reading it, and maybe eventually I’ll give up and move to Norway or Sweden instead, but until then here it is again:
The UK runs persist external deficits.
The rUK would run even larger external deficits, due to the loss of Scottish net exports.
Those deficits can be financed by
a) Private sector deficits, which are unsustainable because the private sector is a mere currency user. It does not issue net financial assets.
Or
b) Government deficits. If the government issues its own currency it can run these deficits indefinitely, as the UK has for decades.
Governments which give up their currency sovereignty lose the ability to finance external deficits, as with Greece, Spain, Portugal etc. in the Euro.
Governments which have their own currency, but peg it to some other currency, also lose the ability to finance external deficits, as with Argentina leading up to the collapse of it’s peg in 2001.
Flimflam man
Can you explain your final point about pegged currency
“Independent Scotland could join the euro” – Alex Salmond.
http://uk.reuters.com/article/2011/12/14/uk-britain-europe-scotland-idUKTRE7BD0QM20111214
BtP:
As I say, I think this is one area where they have no interest in changing the rules. If they were going to bend the rules, they’d have done so by now. As a matter of fact, Poland have already tried arguing that they should get to skip that bit (http://www.wbj.pl/article-62387-belka-poland-should-adopt-euro-without-erm-ii-waiting-room.html), but as the whole point of it is to ensure that your economy won’t destabilise the Euro, I just don’t see it happening.
But either way, that’s not what journos are presenting to people. They’re just going “duuuuhhh, Scotland could join Euro, me not know what rules are, me just repeat what other man say.”
testing testing
Funny how often the truth is so simple, eh?
Is the BBC doing this deliberately? Probably and another reason to question their impartiality.
Speaking in May 2013, nine years after the Czech Republic joined the E.U., European Council president Herman Van Rompuy stated:
“The prime minister added in his statement that it is even an obligation to join the euro, so that is nothing new. But you have to meet all the criteria. At this stage the Czech Republic is not meeting all the criteria, so the problem is not a problem today. But even if you meet the criteria, then of course the Czech Republic has to make its own decision in its own constitutional order. So I will not interfere in this internal debate; it’s up to the Czech Republic to make up its mind.“
you certainly get fed up having to repeat it to every unionist numpty you meet “WE CAN’T FUCKING JOIN OR BE FORCED TO JOIN THE EURO” never, no-way, nada, nae-chance and thats just to the labour MSP’s and BBC presenters.
r whittington
Scotland could join the euro but the operative word in that article is eventually. It is a medium term solution not a short term solution.
The euro issue is relevant in one sense, which is that if we want to join the euro we should be planning to do so from day one of a new currency. Pegging the currency to Sterling, for instance, isn’t going to make much sense if our ultimate aim is to join the euro.
It’s not a popular option, but if we’re ruling out a currency union with rUK I actually think having a long term aspiration to join the euro makes a lot of sense. By the time we did join (realistically in about 5 years time) it will be a completely different structure than what exists in the Eurozone today. We might have Eurobonds, banking union, debt mutualisation and it could well be a far more stable currency than Sterling.
r whittington (Dick?) – yes, very nice. The first line of the article: “Scotland could eventually join the euro”
Anyone could “eventually” join the Euro. The way the EU is expanding, even non-European countries may soon be able to join the Euro.
Eventually.
And here is an idiot from the GH… one of many.
“So whats the option now that Salmond can’t have the pound, the Euro don’t you have to be in the EU to have that and with Spain certain to veto Scottish membership we won’t be in that.
What with our magnificent leader have achieved u in the unlikely event of a yes vote.
Out of the UK, out of the EU
Out of the pound, out in the cold. Does he think we are out of our minds”
Susan S:
Ordinary folk like us aren’t idiots for not knowing this stuff – we’re not the ones being paid to understand the ins and out of political issues. Journalists have absolutely no excuse for not finding this stuff out, though.
The UK and Denmark (tiny wee Denmark, similar size to tiny wee Scotland who’ll apparently never get its voice heard in Europe) both secured an official opt-out from the Euro in the Maastricht Treaty. However, while Denmark has actually been part of ERM II since 1999 (to keep its currency tied to the Euro, even though they don’t want to use it), the UK hasn’t. At least part of the reason for that is presumably because of memories of Black Wednesday in 1992, when the UK economy crashed so badly that they had to remove Sterling from the first version of ERM II (ERM, well, I).
But yes, apart from those two countries, everyone is “obliged” to adopt the Euro… At some point between now and the end of time, that is!
(It should be noted that the agreement that secured Denmark’s four EU opt-outs in 1992 was called… the Edinburgh Agreement!)
@Richard
Sure thing. If a country pegs it’s currency to some other currency it is guaranteeing that their value changes will move in sync, usually within some narrow band of relative movement. So if iScotland issues a Scottish pound and pegs it the the rUK pound it guarantees they will rise or fall together.
Falls in value are easy enough to match: you buy foreign currency using your own currency on foreign exchange markets, creating new currency if necessary. This suppresses its value.
Rises can be trickier. To increase the value of your currency you need to make it more scarce on fx markets, so you need to acquire foreign currency in order to buy your own currency and remove it from the market.
If your country runs an external deficit it’s hard, and eventually impossible, to acquire that foreign currency, since you don’t have the net sales of goods and services. That’s what happened to Argentina.
If you run an external surplus it’s possible, because now you’re selling more goods and services in exchange for foreign currency than you’re buying, and you can build foreign currency reserves.This is why China can run its peg to the dollar; it’s a net exporter.
Excellent article Doug.
As others have intimated, I’m assuming you’ve aimed this article at sh*** for brains Douglas “I know everything” Fraser. 🙂
Superb piece of writing.
Can we please have some ‘real’ journalists report this on ra telly fingy? LOL
Laughed like a drain.
Excellent Doug.
The amount of arguments, (cough) respectful discussions yesterday and today on this issue…
Good to see someone listing the facts when writing about Euro membership.
I am not convinced it will catch on though Doug.
Good and informative explanation Dougie, as to why we, couldn’t just jump straight into the Euro, as for your analysis of whether people say, we’ll join the Euro,if we can’t have the pound. I think most if not all the presenters and journalists know fine well, what they’re saying, in order to scaremonger.
Now Osborne is banging the currency drum, all manner of Euro currency soothsayers will materialise out of thin air to add their, tuppence worth of,doom.
Fantastic work today, lads.
This site deserves a Nobel Prize in Honesty and Dynamism.
O/T but interesting results.
http://www.theguardian.com/business/poll/2014/feb/13/politicians-block-currency-union-independent-scotland
The only inconsistency is the premise that using the euro means having euro notes in your hand. Just as it says above, one could just as easily use the pound.
The interesting thing is that if iScotland pegged to either the sterling, the euro or buttons for that matter, how different would a Scottish score look in your hand?
It has been a favourite wink of unionists to point out that somewhere on Scottish money there is a pledge that the BoE guarantees the Scottish printed notes. Check now – I have a Clydesdale £20 in my hand and guess what? It doesn’t say that.
So, in fact, the Scottish notes we have in our wallets, banks and under the mattress will do exactly what they do now, no matter what currency the Scottish pound is pegged to.
And just as importantly, look exactly the same.
Although I am in favour of Scotland having its own currency eventually, I wonder if there would be any benefit to Scotland using the Euro (without permission)?
Would loads of European company’s that trade with Ruk want to trade with Scotland instead as there would be less costs involved converting currency?
Re currency in general.
Michelle Thomson, B for S in an Allan Little package on Newsnight and then Ivan McKee on Newsnight Scotland.
Would be great if someone could capture the footage.
Sorry Stu I’m O/T again but I’ve just checked up on Question Time tonight coming from the balmy shores of Scunthorpe. 🙂
Tonight Stu I’m going to be:
Damian Green M.P.
Chris Bryant M.P.
Janice Atkinson
Lord Winston
Cristina Odone
I just wonder how far into this one we get before there’s a question about Scotland, Scottish independence or currency union?
Thanks for that Doug… however, isn’t one of the main requirements of any country aspiring to join the Euro that they actually have their own currency?
BBC 2 TV now on the Stuarts givng a very one sided view of the Darien Scheme and no mention of Defoe or bribes or troops massed on the border and riots on the streets over the Treaty of Union.
FlimFlamMan
What about a publicly funded National Bank (savings and public investment), to multiply our national receipts? Would this provide democratic accountability of Scotland’s own currency?
Thank you! This has been driving me nuts since they first brought up the euro.
Nick Robinson on BBC news stating the Euro option… completely exposed by the facts in this article, as being either incompetent, ignorant… or a liar!
I’m not convinced that joining the euro (in the longer term) would be such a disaster anyway, I would imaging that after the recent fiasco with Greece and Spain the EU would be building in safeguards to prevent such a near disaster happening in the future,
In all likelihood it may be that Scotland’s independence could well coincide with an auspicious time to enter the euro in the next 10 years or so.
Like i mentioned in another comment, BBC Scotchland when talking about the Euro option tonight showed nothing more than riots. WTF, Unbelievable the blatant tactics being used. They were also used in that other jaw dropper “Scotland`s top ten battlefields”. I hope someone is writing a book on how the media fought and lost the last battle of the UK. The battle within.
Hares are set running on this site because this site is important. Ideas are being dropped into discussions and thought to be subtle but to the politically aware they may as well have a Unionist badge. Rev you are officially more important than even you could have dreamed.
Yes is winning and it shows!
@Dougie Daniel, am wie you Dougie, its distracting to keep on this issue,they generate shite idiots chew it over.distraction techneque.
I was disappointed to see the FT perpetuating the Euro myth in an otherwise good article I’ve blogged about in Raw Power understands only one thing: Raw Power.
http://logicsrock.blogspot.co.uk/2014/02/raw-power-understands-only-one-thing.html
@Rev. Stu
I know you don’t like people signing off at the end of their comments but maybe the other contributors should. I hate seeing you getting the credit for their work 😛
Interesting change in tone on BBC Radio 4 headline news at 10 just there with Osborne’s no currency described as an “attack” by Alexander etc. In prog detail probably sticks the usual BBC in Scotland boot in as per but its odd editorial flip flop. Maybe some BBC producers are decent human beings after all.
I was enjoying Benidorm tonight tae the fuckin Krankie,s appear,d, yer to close tae us in Spain fuck of back tae Australia
Boorach:
In practice you probably would, aye. But if we had a Sterling union and then agreed to put it in ERM II, I see no reason why Scotland couldn’t join the Euro from that. Remember, Belgium and Luxembourg shared a currency from 1944 until the Euro began.
I’m not convinced that Alex Salmond has ever abandoned adopting the Euro as the choice of currency eventually for an Independent Scotland and I’m all in favour of that.
However, in order to win the referendum after the troubled times the Euro went through in recent times he realised it was most likely a vote loser. As a pragmatist he has been promoting currency union, whilst all along believing that at some time in the future another referendum would be offered to the Scottish people about joining the Euro.
I believe this will come to pass.
Just posted for the first time about 10mins ago, was moderated and appeared but now its gone???
CJ
Sadly the BBC is beyond parody.
@taysideterrier, did you bring any butterie,s wie you, ill put the kettle oown,a gid welcome tae you.
Douglas, this is genuinely the first time I have seen anyone with real knowledge of the Euro currency process writing an article. I’m used to finding useful information on this site but this is the first clear, concise statement of the Euro position and how the process of joining the currency union actually works. The only part I actually previously knew anything about was the ERM and the two year requirement. Little surprise real knowledge shows what the BBC are trotting out is pure nonsense. I’ll be pointing several ‘you’ll be forced to use the Euro’ smug gits to this article. Thanks for supplying the information.
Funnily enough I have no great attachment to the pound. It’s simply the physical expression of all that money that flits in and out of my bank account without much regard for me. I could easily be just as happy using the Euro; it would mean I wouldn’t have to hand over commission to change money when I go to visit my sister in France. I have no objection to any other currency either, but the fact remains that the pound is the simplest one to use, not least because we’ve got it already.
If one day in the dim and distant future we’re a Euro currency state, grand, but if not I can’t really see it bothering me over much. I have little doubt that we could meet the stated criteria in the medium term anyway.
Sorry I’m O/T Stu, gosh I’m doing that a lot tonight. 🙂
I’ve just read a tweet from Scotland Tonight that Alex Salmond
tells us Herald have “senior coalition source suggesting they won’t respect the result of the Scottish people in September”
Once THAT news gets out I think the ripple of voters moving over to YES thanks to Ozzy Osborne will increase substantially, in my ridiculously humble opinion. 🙂
Hahaha Kirsty Wark well and truely stuffed!
“Wark is regarded as being close to the Labour Party.[8][9][10] Donald Dewar, Scottish Labour politician and former First Minister of Scotland, a close friend, appointed her to the Scottish Parliament Building Design Selection Panel, which chose Enric Miralles’ design for the new parliament” (WIKI)
Where else but on Wings would you find on one page: total deconstruction of the join-the-Euro position, “hares running”, and The Krankies in Benidorm …?
YES is definitely winning.
Tomorrow’s Cybernat Password (I will say it only once): “seagulls follow the trawler”
Who was it that said ,keep them quessing( barnam ).
Barnum
O/T Scotland tonight – Thats 3 times the rodent referred to Scotland’s independence as “setting up a new country”!
Rhona sure missed a trick there by not asking him what country Inverness is in…
O/T apologies.
I have to congratulate the SG on today’s announcement from Westminster–a currency union will not occur. Michty me–they really do not ‘get’ what is happening. They are so many steps behind the game line it makes one actually feel some pity for them. Really, it does.
Like a Grandmaster chess player, the Scottish Government is thinking (at least) 7 moves ahead in this contest. Osborne & Co. are merely reacting, making all the (wrong) moves that the SG wantthem to make. And because Westminster is so self-absorbed in its own strategy of fear with the good cop bad cop nonsense, they have totally missed the Philidor’s Mate (or ‘Smothered Mate’) that they have just sleep-walked right into.
The SG have cleverly sacrificed negotiating positions that they do not actually want and, in so doing, have cleverly boxed Osborne & Co into a corner, where he is now strategically stranded and boxed in with his own bluster & lies.
Brilliant strategy. Well done SG. Now just move the Knight when the time is right. We have them where we want them.
Just watched Kirsty Wark (she ought to be ashamed of herself) trying to give AS a hard time, constant interruptions as usual. Why ask questions when there is absolutely now interest in the answer, only persistent hounding, tripping and frankly bad manners. Funnily enough they (msn) very rairly treat the no people, especially the toffs, this way. Something more forceful needs to be done, especially against the BBC – blatant bias and clear agenda is continuing. The tactic is let’s just ignore these nasty Scots, it’s our GB, our pound, etc, etc. Full marks to AS for staying calm, collected and in full control of his agenda.
It has just occurred to me that the Scottish pound, pegged or otherwise, would be a huge opportunity for business in Scotland, if the stories of transaction are realised. There would many ways that home producers could underprice rUK producers and indeed develop new products which they previously didn’t entertain because of economies of scale in bigger markets.I think of the English based supermarkets who are at least 80% dependent on English produce. That needs to change.
I was just thinking, in an imaginary world where BT actually had a grass-roots campaign, what would it be like chapping doors tomorrow?
Knock, Knock.
Who’s there?
I’m from Better Together. Can I have a word with you about the Referendum?
Better Together? Have you come here to threaten me? … GTF
Well that’s my earlier question answered, 2nd question about Scotland not being allowed to have a currency union. Thought the audience member who asked the question talked sense, for once for a BBC QT audience. 🙂
@Arbroath 1320
11.05 (ish) is the answer to your question re QT and when the first question about Scottish independence occurred.
@CameronB
Hmmm, there’s a few things there.
First; I’m fully in favour of public banking in general, not merely better democratic oversight of the central bank or treasury. So I support regulating all retail/commercial banking as public utilities, or just outright nationalisation and public operation.
On the question of democratic accountability and the currency; central banks aren’t really independent, certainly the Bank of England isn’t. It is 100% owned by the UK treasury. It has delegated operational responsibilities, but not real independence.
However, there is enough lack of accountability to make the situation ripe for abuse. So I would support incorporating the useful functions of a central bank — and depending what was done in terms of public banking, and the resulting changes in risks and liabilities, these functions would shrink — into the treasury. And add to that a whole bunch of operational transparency.
So then multiplying national receipts. Nations that have their own currency have the capacity to purchase anything that is available for sale in that currency. If it is available for sale, the nation — government — can create the currency to purchase it.
Try to spend more than can be produced and sold though and you create inflation. That’s true whether it’s the government or private sector doing the spending. The key is not exceeding the capacity of the economy to produce, so you want a well balanced economy that actually creates useful products and services, and educates its citizens so that it can continue doing so. I can go into that more if you like but I know I annoy people. Well, I definitely annoy the Rev.
An independent Scotland will have the advantage of an external surplus thanks to oil, so whatever currency and banking structures it puts in place that surplus will smooth the transition process.
Forget the Euro. It’s Plan A and Plan A only. Stare them out they will blink first.
Stoicism is a Scottish trait and this is a time when it is needed.
@Doug.
Interesting report, could you pls advise, post independence in 2016 could Scotland ‘link’ the Scottish pound to the Euro for a two year period to meet criteria 5 and then join the Euro two years later in 2018?
An independent currency, as per Norway, would allow true independence for the Scottish nation and for political control to move back to Scotland from UK/European domination.
Mid-term entry into the Euro could be a threat to hard won Scottish freedoms, do you know if a referendum prior to any Euro adoption would be supported by the SNP prior to adoption?
It does seem from the link to the article above and previous statements that Alex Salmond is considering mid-term Euro membership.
Thanks Betty.
Thought most audience members were pretty fair until we got the last idiot wittering on about SNP winging on about currency union.
@john king
Do you mean the continuing fiasco with Greece and Spain? 26% unemployment, 60% youth unemployment. Those are Great Depression levels of suffering, but the banks have been propped up so the BBC sure doesn’t cover it.
The Euro has been and continues to be a disaster. Either the Euro needs to be scrapped, or the Euro zone needs to become a currency union of the sort that actually works; an effective or actual nation state. A Federal Republic of Europe with appropriate deficits, fiscal transfers and democratic control.
“There is one way Scotland could use the Euro without meeting the Maastricht Criteria.”
Not strictly true. There is a second option, which would be a monetary agreement which allows formal adoption of the Euro, as in Andorra, San Marino, The Vatican and Monaco.
On the wider currency issue, I’ve never been a great fan of doom mongers who say ‘you must have currency X or the sky will turn black’. The UK hasn’t been adversely affected by staying out of the Euro, and the SNP’s claims of major hardships for rUK if there is no sterling union are equally unlikely.
If business knows what the score is, they will make the necessary adjustments, and while currency movements sometimes work for and against you, and add an element of risk, it seems far more important to get your fundamental economic policy right. Otherwise, no country with independent currency would be able to function, and we know that’s nonsense.
Scotland has plenty of currency options, with little to fear from any of them for either them or rUK. The only option to fear would be a sterling union without full fiscal union, but otherwise, the world is your oyster.
Uncertainty is the devil though, and independence becomes more likely, this will have an impact.
@ronnie anderson
Cheers for the cuppa, Thanks for the welcome.
Been following this fantastic site since October and have been coming here for a reality check whenever there’s a scare story in the MSM (everyday then!) Great for collecting ammo to debunk story’s for uninformed folks.
But can Scotland possibly negotiate joining European Free Trade Association instead? Who cares about EU membership at this point. I’d rather see Scotland become more like Iceland/Norway/Liechtenstein/Switzerland – with all the same privileges EU members enjoy but none of the liabilities.
Countries with their own currency and strong economy. Countries that don’t have a fetish for bank bailouts.
It would be nice to see what it’s like to live in a country that doesn’t drive itself into the ground by printing money out of thin air. Just saying…
Well said Rev,
It’s incredulous that the BBC and others should be chanting the mantra that one of Scotland’s immediate options is to join the Euro. As intelligent people, they must know that that isn’t the case for all the reasons you give not least that a country has not only got to be part of ERM11 for two years but that a country must actually be a member state of the EU in the first place!
That leads one to believe that they obviously prefer to purposely confuse, scare and threaten people with things that just can’t possibly happen.
Having said that. I have no doubt that the Euro, which isn’t actually doing as badly as the British establishment and Ukip would have us believe, will fully recover. It will be the strongest currency in Europe and the world and sterling will be an isolated funny money currency through time.
That is why we should keep the pound, peg it to stirling and go for the best thing available when the time is right so that the pound in our pocket will not change as Better Together and the MSM are also lying about.
Let’s keep the pound while working for better and tell Westminster and the BoE that they can take their debt and get lost.
It’s INCREDIBLE. Look it up. (Sorry, shouldn’t be cranky, but “incredulous” is what YOU are if you don’t believe something. The thing you don’t believe is incredible.)
Alec:
As per the line above the one you quoted:
YOU’RE WELCOME.
Everyone’s seen this, aye?
https://pbs.twimg.com/media/BgY-uCTCUAEeaVB.jpg
The Sunday Herald must be out early.
Morag,
“Incredulous” is I think appropriate given what I was saying. George Osborne’s etc statements were incredible but to me and most people on this site they were incredulous.
Are you some sort of grammar polis person that ignores the contents of a message? lol
@Alec
I think you having doubts, maybe becoming a Don’t Know? Go on just go the whole hog and VOTE YES. You will be liberated, Labour no longer exist but can in the New Scotland.
Doesn’t seem so bad does it?
I never watched Kirsty Wark, she’s too chummy with the likes of Jack McConnell to even pretend to be impartial. I did see Danny Alexander burbling about a ‘threat to the strength & stability of Sterling’. I wonder how strong & stable Sterling actually is? Especially compared to the Euro (are we all supposed to assume that that’s bad ‘cos it’s got ‘eu’ in it?), or even the Danish & Norwegian currencies.
R Whitington says:
“Independent Scotland could join the euro”
but not Immediately!
Fine so they dont want us in theSterling Zone. At best this looks like sour grapes at worst a form of bullying. Bullying Scots is never a clever idea. Frankly the money is no big deal, we have sterling controled by England, the Euro controled by Europe or the Mark as wur ane. Go for the Euro and be done with it and lets move on to the next nonsense from Westminster
In the first few year after independence ther are only three logical options for Scotlands currency. Firstly using Sterling with rUK agreement in a currency union second using sterling without agreement and finaly a new Scottish pound.
In my view the best option in financial terms is a new Scottish pound however can you just hear the media and Unionist politions telling us how the currency will be worthless and you will lose your pensions and savings a banana republic without bananas.
For that reason I can not see AS going down that road at this time although in the long term once we have been independent for a few years and the fear factor has gone it will be the way to go.
Firstly though we need to win the referendum and a lot of voters will worry about losing the pound so if our Westminster masters will not play ball we need to move to using Sterling without agreement. There will be a downside
with no backup from the BOE but I doubt many ordinary voters will care much about that as long as they still use the pound as they always have.
In addition if we have no share in the BOE or Sterling we can and will refuse to take at least part of the UK debt. That is going to make the figures for Indy Scotland look very good when compared to a virtully bankrupt rUK.
A win win all round.
OT did you here Michael Kelly on Newsnight say that all Scottish MP’s and MSP’s would back Ed Balls posiotion rufusing a currency union even after a yes vote otherwise it would cause Labour to lose the 2015 GE to the Tory’s He does not seem to get it that after a yes vote Labour in Scotland had better stop worring about Wesminster and start worring about Scotland.
I thought that a large part of this debate was about the divergence of economies. With this in mind, would it not be foolish for an independent Scotland to tie itself to the UK – or to Europe, for that matter? A stand-alone currency, at least for a couple of years, would find a level, perhaps, and also indicate whether an independent Scotland would be well-served by any of the currency unions on offer.
Southener:
Assuming the EU agreed that we met the other four criteria, I don’t think there’s anything stopping us doing that from a technical point of view. Realistically though, I think the Euro crisis made them a lot more wary of just shoe-horning countries into the Eurozone.
I got the content of the message. The way it was expressed made me cringe.
STATEMENTS can’t possibly be incredulous. Only a person can be incredulous. It’s an opinion, a frame of mind. Perhaps you and most people on this site were incredulous at the stupidity of Osoborne’s position, but that’s not what you said.
Morag
I bow to your greater wisdom. Now can you stop bothering me about grammar?
Excellent article, now that the general public has been wakened up to the nuances of currency let’s hope that the Eurozone conditions also become general knowledge. Only slight disagreement would be in “More to the point, if Scotland goes down the road of using a fully convertible currency without permission, then it’d be absurd and pointless to use anything but Sterling.” no-one owns a currency so no-one can actually give permission. The nearest to ‘permission’ can be a formal agreement or union.
For a while the Noes have been rising to a crescendo of ‘you have no Plan B’ when a lot of us knew there was a Plan B, C and D (informal use of Sterling, new Scottish currency and longer term Euro) so now they should all know what can be negotiated after a YES vote.
The currency question is now done and dusted so that can’t be dragged up again after it calms down in a couple of days until after the Referendum. The current debate will have firmed up some Noes but more likely converted a few soft ones when they realise how desperate the BT and Westminster campaign is becoming.
O/T Listening to Henry McLeish on yesterdays GMS I’m sure he is close to abandoning BT. He mentioned ‘the unionists’ a few times as if he was distancincing himself from them. Maybe if LfI or Denis Canavan was to chap his door and have a frank debate he could be lured to the YES side, perhaps he’s there already but does not want to be trotted out as a high profile convert (which he would undoubtably be!)
It isn’t grammar. It’s the meaning of the words. Get upset when Stu tells you off for using four dots instead of three for an ellipsis, that’s always fun.
@Morag
You fell foul of the Patrician’s first rule for grammar nazis:
“Any post pointing out an error in grammar or spelling in a previous post, will itself contain a spelling or grammar mistake.”
for reference:
“STATEMENTS can’t possibly be incredulous. Only a person can be incredulous. It’s an opinion, a frame of mind. Perhaps you and most people on this site were incredulous at the stupidity of Osoborne’s position, but that’s not what you said.”
😉
I am incredulous at the incredibly bad grammar protestations expressed principally by persons who do not realise the enormity of their erroneousness. Pick the berries out of that if you may. I bet a pound to a cent that you cannot. BTW Go Morag!
@Thepnr – No – there’s be no change in my view. There’s nothing inherently wrong with independence if that’s what people want, but the policy prognosis presented by the SNP is really thin and based on a series of completely false assumptions. I’d far rather see a properly thought out plan presented to the voters, which really means two votes.
No one in Scotland knows what they are voting for.
I keep thinking about Douglas Fraser as our source of Financial/economic information on BBC Scotland 🙁
It’s a subtle form of manipulation. Instead of putting a clever person in place who can spin the data. You put an idiot instead who makes an arse of presenting the data.
Same outcome…!
Commenting just so I can see the comments after 2:20 am…
I’ve not been having the cache problems others have reported. Last night my main problem was catching up with all the comments that had appeared, and it was the same on my PC and my phone. It seems to be a very individual thing to different computers.
It suggests this attack is very serious and I wonder if someone wanted Wings offline during exactly this time period. Interesting, if so.
Patrician, Famous 15, 🙂
Is the general assumption that Osbourne has a choice on the shared pound a correct assumption? The murky world of central banking never seems to reveal it’s hand on what is really going on.
Is it not more likely that the BoE has ‘TOLD’ Osbourne what to do? Osbourne is a lightweight in financial experience and it is unlikely Labour or the Lib Dems would follow his lead alone.
The general perception is that the BoE is ‘owned’ by the UK from 1947, however when one looks deeper it appears this is far from clearly the truth. The BOE is owned by a secretive company where there are only two shares out of over 100 held by the British government. Despite repeated freedom of information requests limited information seems to be available over and above this.
My point is that if the BoE is leading here and not the UK Government, the real question seems to be why would the BoE then adopt the position of no ‘shared pound’?
One possible answer could be limited gold reserves. Even after ‘Brown’s Bottom’ gave/sold half our reserves of gold at a record low there are still some gold reserves held by the BoE, but are there enough gold reserves retained to sustain confidence in a £15tn debt and any increased risk from a ‘shared pound’. I fear not.
When Osbourne said a currency has no assets, he was being disingenuous to put it mildly. The core asset central bankers respect is gold and there is still some left in our vaults despite Browns Bottom. I mention this as the EU may require Scottish gold reserves prior to Scotland joining the Euro or the setting up of Scotland’s own currency.
Thanks for the informative replies, guys. My head is about to explode, however I am armed with valuable comebacks to stoopid retorts pertaining to the Euro.
Initially using the pound sterling or even better having your own currency and pegging it to that like others have done would seem a good option. It’d be possible down the road if we did make our own and peg it to then float it if we felt it was a constraint.
I don’t see why the media, politicians and “experts” are pretending Scotland’s situation is somehow uniquely impossible or difficult and not something that has happened before and old problems solved.
Really feels more and more like a ridiculous tantrum from our Westminster government. People need to be made aware that what is happening is not a big scary unique thing in history.
Also highly amused by the squirming and avoidance that comes up when they are pinned down about Scotland getting the short end of the stick when it comes to Sterling and the assets but expected it is a given we’ll take on debt that wasn’t even accrued by spending in Scotland. They know they are over a barrel. Between the balance of payments and the debt share they know they’ll want Scotland on board with the currency as it is simply best for themselves. When it comes to the crunch the money will talk and bullshit will walk. Only Labour will be stupid enough to cut off their nose to spite their face and leave themselves with nothing.
@alec
On the wider currency issue, I’ve never been a great fan of doom mongers who say ‘you must have currency X or the sky will turn black’. The UK hasn’t been adversely affected by staying out of the Euro, and the SNP’s claims of major hardships for rUK if there is no sterling union are equally unlikely.
pleasant to see a balanced comment though I’m suprised the more passionate gnats haven’t berated you for departing from the official line.
i.e rUK will collapse without Scotland and will come begging AS for the privilige of a sterling union. Dream on..
Scottish oil accounts for around 4% of UK’s current GDP – definately an adjustment, but hardly a disaster.
Sterling zone was always a non starter – a socialist ‘tax and spend’ government in iScotland was always going to default on an agreement that gave ‘Westminster tories’ a veto on their borrowing/spending levels.
The majority in England are indifferent to the independence debate but have NEVER assumed poor wee Scotland couldn’t run their economy very sucessfully… I suspect some naughty gnats have spotted the political mileage in that one!
Their response is simplistic – if they want independence then they should have their own money.
Trying to save face by insisting the english will give in is counter productive – assuming a YES vote you need to clarify what your interim currency during the 2-5 waiting period for EU membership will be.
The logical choice is trhe euro
“If Scotland was trying to join the Eurozone, it implies Westminster has rejected a currency union.”
I’m sorry, but this sort of remark makes gets right up my nose. If an independent Scotland was trying to join the Eurozone it would be because it wanted to – that’s the whole f***ing point of independence.
I can see No real problem about being denied a currency union if the UK throws it’s toys from the pram in the event of a yes vote. They would have to negotiate a realistic transitional period to allow business and households to convert to a new Scottish currency. But this is not the terrible tragedy that is painted by the yellow press and the better together lot.
The market doom-mongers that predict that Scotland would not be able to sell any debt they issue seem impervious to the fact that in the fat tail type world economy that we have at the moment, where yield seekers are buying just about any junk that pays more than the thin yields on so called gilt edged debt are again trying to scare Scots into voting no.
Scotland would be well within their right to refuse to accept any responsibility for sterling debt and they would be also well within their right to make the use of Faslane and other bases extremely difficult.
The UK, like any other colonially inclined entity never accedes to reasonable proposals when it comes to self determination. They themselves are, on the one hand trying to frighten the scots into coming to heel and on the other implying that they will cut us adrift from the EU to satisfy the xenophobic elements that pervade more heavily the further you travel south.
As far as Denmark is concerned, I lived and worked in Denmark for several years immediately after the UK and Denmark acceded to the old EEC. The Danish currency was the weakest of the countries that used the kroner. The Swedish was the strongest.
Now that the Danish Kroner is pegged to the euro it appears to be stronger than the Norwegian Kroner despite the oil wealth and the enormous sovereign wealth fund revenue stream that the Norwegian people enjoy.
The Swedish Kroner has recovered after they themselves had to stomach severe austerity imposed after their own bankers went on the rampage. So there is no underlying reason why a Scottish currency should flounder like a dead dog as all the naysayers predict.
The fact that the UK still has banks that are too big to fail and the government is desperate to maintain their asset values to give the impression that they are solvent when the truth is if the assets on the balance sheets were marked to market rather than the fantasy island values that are used instead, these zombies would be laid to rest. This alone is an excellent reason to bale out of sterling with a smile.
Compared to 2006 when the Great British Pound Sterling was worth 1.44 Euros, today it is worth 1.19 Euros, a 17% drop in value.
In those ten years, not once has the pound ever been, even for one second, worth more than 1.44 Euros.
So next time some glaikit half wit in the British media (and there’s plenty of them) talks about the ailing Euro, point them to any number of currency exchange websites & have a peek at the historic conversion charts.
The pound is chronically ill because Britain’s (England’s) productivity is consistently 22% lower than the EU average & has had a negative trade balance every single year for the last 18 years.
In essence, Britain (England) is a shite country in which to make stuff & when stuff is made, few want to buy it so Britain (England) has to import it instead.
I take issue with the statement in this article that “Scotland’s currency will have been sterling” How will it have been sterling when our currency is not accepted as sterling in England? The Scottish Pound is not sterling and therefore should not be treated as such just to suit Westminster’s wild claims and lies. We used the pound as our currency for 600 years before the union existed and so our Scottish Pound should go back to being recognised as such after, or even before Independence, depending on what we decide, not Westminster! So let’s decide now to trade only in the Scottish Pound and keep our revenues in Scotland, start our own Central Bank and get it recognised around the world especially including the EU.