Wings Over Scotland

“There now follows a party election broadcast by the…”

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The political broadcasts at election time are a time-worn tradition in the UK (as is our reaction to them) but not too many people really understand why political campaign broadcasts take this form, nor why it’s actually quite important that they do.

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Last month saw the first meeting between the UK Brexit delegation and the EU’s, and by many accounts it fell far short of the UK’s expectations. David Davis spent months drumming up the “strong and stable” approach which would see both the divorce deal and the subsequent post-Brexit trade deal negotiated simultaneously. He was told by everyone that this wouldn’t happen, but simply brushed off the warnings. When push came to shove, he finally accepted that he’d have to negotiate the divorce deal first.

This is just the latest in a long string of failures and ineptitudes over the course of the UK’s handling of the whole farcical process and it got me thinking. If Scotland had voted Yes in 2014, what would it have looked like if the Scottish Government had handled that vote the way the UK has managed Brexit?

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Readers of this site will be well aware of the many failings and limitations of GERS, aka Government Expenditure and Revenue Scotland – the document which serves as the informal accounts of a devolved Scotland but tells us next to nothing about the finances of an independent Scotland, as noted just a few weeks ago by the impartial multinational auditors Deloitte.

An article I produced this week for the Common Weal White Paper Project – Beyond GERS – has generated much critical response from Unionists, though some of it has at least been constructive.

Spurred on by the mention of the article by David Torrance in Monday’s Herald, in a column containing several serious inaccuracies, I’ve seen various misunderstandings and misconceptions about it which ought to be addressed.

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This week I published, through Common Weal, a discussion paper on the potential currency options for an independent Scotland in light of the material changes in circumstances caused by the Brexit vote.

This paper examines some of the options open to an independent Scotland and concludes that, on balance, the best option for Scotland would be a Scottish currency, initially pegged to Sterling but with the infrastructure and mechanisms in place to move, replace or remove that peg if and when it proves advantageous.

(As the UK did itself in the 1980’s when the pound was pegged first to the US dollar and then to the Deutschmark.)

One of the requirements of an independent currency is that Scotland would need its own foreign reserve fund which would act as a buffer against trade imbalances and would be used to counter movements in exchange rate (particularly if we were pegged our exchange rate to Sterling).

It was on this particular point that yesterday’s Scottish edition of the Daily Express chose to focus, in its characteristically measured, balanced and thoughtful manner.

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Economics: The art of explaining why all of your models fail to accurately predict either the future or the past.

It’s the time of year again when everyone glances at the first page of a dense booklet of complex economic data and immediately starts using it to make wild forecasts and proclamations despite the long-known problems with doing so.

So it’s also, once again, time to try looking a little further to tease out some details that others might have – let’s be generous here – accidentally missed.

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