Recycle, repackage, repeat
It would appear that we’ve reached the point where the anti-independence campaign has officially run out of arguments, and is being forced to reissue its Greatest Hits.
The headline on the left is from January 2012, the one on the right is yesterday’s.
It hardly seems worth even addressing the issue, because the prospect of the Bank of England banning an independent Scotland’s banks from issuing notes is as empty a threat in 2013 as it was 15 months ago.
The Guardian accurately identifies the notes as a “symbolic hostage” in a fairly sensible piece of analysis this morning, and a shouty headline in yesterday’s Times that “Independence WOULD kill off Scottish banknotes” (our capitals) has magically transformed into a mere “could” by the second word of the actual article.
The entire argument, in fact, is fabricated fearmongering from top to bottom, as the briefest scrutiny will reveal. So let’s scrutinise it as briefly as possible.
1. Scotland CAN continue to use Sterling, no matter what.
Sterling is a fully tradeable currency, and ultimately Scotland (and any other nation on Earth) can use it if it wants to, however much the rest of the UK might object. This is the most fundamental, unequivocal fact of the whole debate.
2. Scotland has no influence at the Bank of England to lose.
The Bank of England, which is in fact the central bank of the UK and therefore 8.4% owned by Scotland, is run independently by its governors. It is currently obliged to act in the best interests of the entire UK – which in practice means England because around 90% of the population of the UK is English.
The idea that the BoE would ever act (or has ever acted) in Scotland’s interests if they ran contrary to those of England is quaint, to say the least. It would be an appalling dereliction of its most basic duty.
The bank has no specifically Scottish representation (either mandated or de facto) on its Monetary Policy Committee, so even in the unlikely event (see point 4) that independence negotiations resulted in a continued absence of any Scottish representation, Scotland would be no worse off than it is now.
3. If a currency union were to be agreed, an independent Scotland would be expected to take steps to manage its economy sensibly.
One would hope an independent Scotland would be expected to manage its economy sensibly anyway. It’s hard to see that it could do much worse than the UK is at the moment, with a trillion-pound debt and a looming triple-dip recession.
4. The rUK has nothing to gain from self-harm.
The “positive case for the Union” (remember that?) now seems to be “England will sabotage Scotland’s economy out of sheer malice if you vote Yes”. The problem is that it wouldn’t just be Scotland’s.
Excluding Scotland from a formal currency union would wreak absolute havoc with the UK’s balance of payments, which is in large part underwritten by North Sea oil receipts. The No campaign gets away with glossing over this point because the balance of payments is a complicated thing and most voters have no idea what it means, but the short version is that isolating Scotland in currency terms would make the rUK much less attractive to overseas investors, with serious consequences for the rUK economy.
And the key point is that the rUK would have absolutely nothing to gain on the other side of the equation by doing so. It would be cutting off its own nose purely to spite Scotland’s face. In reality, the rUK will be desperate to keep Scottish exports (not just oil) within Sterling’s balance of payments figures, because the alternative would be to risk a spiralling financial catastrophe for the UK Treasury.
5. There is NO chance of Scottish banknotes actually being banned.
Here’s a clue:
The Isle Of Man is not, and has never been, part of the United Kingdom. Yet as Wikipedia points out: “The Isle of Man is, for practical purposes, in currency union with the United Kingdom”, and the tiny island (whose population of 84,000 is slightly higher than that of Inverness) has been issuing its own banknotes for decades. The Republic of Ireland issued its own notes, with 1:1 parity with Sterling, for 50 years after independence.
(The Republic, incidentally, is even now officially not a “foreign” country to the UK, rather undermining the hysterical and borderline-racist claims of Alistair Darling and others that independence would see Scotland having its monetary policy determined by the “foreign” rUK.)
The IoM contributes nothing to the UK’s balance of payments, yet hasn’t been prevented from being in a currency union and issuing banknotes. The idea that Scotland, which is vastly more valuable to the UK, would be is frankly farcical.
6. Banknotes don’t matter anyway.
As we’ve already noted, the Guardian piece correctly observes that banknotes are merely symbolic. Even if Scottish banks were to be prevented from issuing their own notes, the truth of the matter is “So what?” – having the physical manifestation of our money printed somewhere else isn’t actually any different to having our trainers made in Taiwan. But see points (4) and (5).
Today’s paper from the Treasury is a dish of last year’s reheated leftovers that nobody wanted the first time around. And while the increasingly-panicked Unionist camp will attempt to make a meal of them, as far as the independence debate is concerned they’re empty calories. The rUK could, theoretically, demand the abolition of Scottish banknotes (as it could do now), but it won’t. You can quote us on that.
Great article! Thanks for explaining things clearly Stu.
The isle of Man had a plastic £ note which was almost impossible to rip.
OT – Scotsman poll on Johann Lamont being suitable FM material looks like another dodgy poll like the one that lost them all credibilty a few months back. What is it they say about only a fool making the same mistake twice.
Rev Stu says: It would be cutting off its own nose purely to spite Scotland’s face.
Pretty much sums up most Unionist scare-mongering stories.
Further to the Isle of Man point.
Scottish banknotes are also backed 1:1 by the BoE meaning that far from forming a currency union, we’d merely be formalising the one we’re *already in*.
It is worrying that the rUK is not being told the other side of the argument ie that Sterling would sink like a stone and they’d be paying £1.50 for bread £ 20 for cherries and £1000 for an iPad.
There is going to be one hell of a backlash against politicians in the rUK when Scotland says Yes
O/T, but I notice that this week’s Scotland on Sunday on-line poll has undergone the kind of overnight transformation that has become the norm over the last few weeks.
This week’s question – “Is Johann Lamont a credible candidate for First Minister?”. Until last night it had run consistently at Yes around 12%, No 88% – this morning it is Yes 52% No 48%.
Perhaps a subject for a future article here?
Even if the Bank of England COULD and DID ban Scottish banks from producing their own banknotes, what kind of idiot would vote No on that basis?
“Duuuuhhhhh, me no want Scotland to be proper country because me prefer to be wee pretendy country.”
I sometimes wonder what would happen if the SNP suddenly said “okay, you’ve convinced us – we’ll have a separate currency instead”. I kind of wish they would, just to see the sudden volte-face by all these unionists currently moaning about it not being proper independence without a separate currency.
The most ridiculous aspect of the currency debate is it frames Scotland as being a hostage to fortune, when in reality Scotland is the one with all the options. The future of Sterling pretty much depends on what WE decide, not rUK. We can choose to remain in a Sterlingzone and keep it stable; or we can choose to remove ourselves from it and see it go tits up. rUK, on the other hand, is stuck with Sterling and a failing economy.
The reality is, once we’re independent, rUK will be begging us to remain in Sterling. I think this point should be made more forcefully, to be honest, as well as perhaps making it more clear that there is nothing stopping us setting up our own currency if that seems the better option post-2014.
What you say makes absolute sense and I agree that rUK would be doing a great mistake for the £ if refusing Scotland’s wishes.
However, there is always the possibility of irrational spite, while it seems remote, do not misjudge the bitterness of rUK should Scotland leave the Union, I have little faith that they will not work against us.
Wisdom would suggest they would be foolish to do so,but these are people whose thinking is they are always entitled to be right, they will, to begin with, throw their toys out the pram. Until of course reality actually sinks in, then, they will back track.
I also see them trying to make Scotland the bad guys, and drive a wedge between us and n.Ireland and Wales as well as the English themselves.
Really get my goat up when i hear Call Kaye this morning debating Currency…but being deliberately obtuse to Isle Of Man and other examples when folk called in.
Full blown attack coverage of this on all fronts of MSM. However one really annoyed me was BBC News24 saying “A rerun of rhetorical Battle of Bannockburn!
I note that the Isle of Man being a dependency is not part of the EU.
Arguably with their new focus on absolute truth, the Unionists should label their proposed successor state for EU purposes:
Former U K Excluding Dependencies
Yet more ‘scary’ tales. Hilarious.
Who is the wee lassie that’s featured on the Eilean a’ Bhannain banknote? Or was it a gey auld yin?
I think that scare stories like this are all about bolstering the conservative/Conservative voters in Scotland that BT is realising are drifting away from formerly staunch NO positions. It won’t win anyone back from DK or YES though.
Some quick points from my side.
(1) Agreed
(2) Not sure about this; surely the BoE *does* act in the interests of the entire UK when taking decisions? Particularly since Scotland does have a disproportionately large banking/financial sector?
(3) Whilst I share your hope (and am optimistic), it can’t be denied that the current Scots economy is heavily dependent on volatile oil markets/exports and the financial sector. Given these factors, and given that the “control” of (and vagaries) of these would not be in the gift of an indy Scots government (any more than they were in the UK government’s, albeit with far less inertia than in that case), it’s not a given that the sensible management of the economy is down to the Scots government in entirety – or even much at all in Scotland’s case, as a small nation heavily dependent on oil and finance? Just saying.
4. I’m not at all certain I can see the “benefit” of having the pound strengthened by oil revenue that doesn’t belong to the rUK – in fact the total opposite. Michael Edwardes (1970s CEO of British Leyland) once famously said “leave the bloody stuff in the ground”, referring to an ever-hardening pound leaving his company’s products even less attractive to the rest of the world than they already were, courtesy of a lazy, unionised workforce that used to gaffer tape the cars together, when they could be bothered to turn in for work at all. Poor sod; as if he didn’t have enough on his plate…
The point I’m making here is that, for the purposes of stimulating an ailing economy, particularly in terms of exports, a weak currency is very much to be desired – just ask the Chinese. Even assuming that there would be a firm, meaningful ‘beneficial’ (to rUK) link between Scots oil, sold in UK£ for the exclusive benefit of Scotland (and I’m by no means sure that there would be), any such “benefit” would be more than cancelled out. Where in the world are there small, oil-rich nations that ALSO have strong manufacturing/other export-led economies? The oil is a mixed blessing; condemning such states to having a strong currency and therefore no chance of competitive manufacturing.
Surely the decision as to whether or not the rUK and Scotland enter into a currency union comes down to a decision by Scotland AND the rUK. From where I’m sitting – and still haunted by memories of the ERM – there’s very little in it for the people of the rUK?
5. Dunno about “banning banknotes”, but any comparisons to the Isle of Man etc. are surely spurious here. Scotland’s economy is vastly bigger, so whereas any effects, deleterious or otherwise, of IoM etc. can easily be absorbed by the much greater UK economy, that surely would not hold for Scotland vs. rUK.
Surely the hysteria of UKOK over the currency is only going to have one outcome: a few thousand more undecideds realising that there is no positive case for the Union, and that they are being lied to. As the article says, they are hoping to play on people’s fears especially since it is a complicated subject, which is also why UKOK constantly seeks to conflate “currency union” with “budget decisions”, a risible tactic that insults the intelligence of the electorate.
The currency is in my opinion like the monarchy or EU membership – a complete non-issue in terms of the YES/NO vote on the day, while only a YES vote provides the fantastic opportunity to choose our own future on the topic. The currency was never going to change on day 1 of independence (I will hereby make an uninformed reckon that due to the complexity of changing currency, no country in the world has ever done this – counting “using [own currency] pegged with 1:1 exchange rate with [old currency]” as keeping the old one, since the difference on day 1 is pure semantics.) The timescale of changing currency is of order ~a few years. Remember how long the transition to the Euro took for the first Eurozone countries? Indeed, recall the timescales involved for any other country joining the Eurozone – ERM2 etc etc.
Post-Yes, in 2016 and beyond we will be able to vote in elections for parties with a range of policies on currency, as well as the full range of economic options. Post-No, we will be tied to the policies of an economically-illiterate UK Government (of any colour), a fate far worse than simply sharing the currency with said eejits. As others have noted, a currency union requiring agreed responsible borrowing limits etc might be the only way to save Westminster from itself.
To be honest, this needs to be nipped in the bud once and for all. If I were the Scottish Government, I would start to make noises about a Scottish currency, and say that Scotland won’t use Sterling if that is what Westminster wants …then watch the train come off the tracks at the Bank of England, as they howl at Westminster to prevent this.
Personally speaking, Scotland is a first world country, just the same as Germany, the US, France, etc. It has a highly educated population, major industries, and the 4th largest Financial Center in Europe. With at least £3 trillion pounds worth of oil scattered around the Scottish Coasts, it means that if Scotland did produce it’s own currency, then the value of that currency would not only be very credible, it would be of serious value. I see it no worse in being given a banding of AA+ (the same as Sterling I think).
If Westminster wants us to go down that path, then personally, so be it….
MB It won’t win anyone back from DK or YES though.
Quite. So long as people won’t wake up the next day with their dosh worthless this is not a big issue. As their dosh is in £Sterling, it will continue to be in £Sterling until such time as they decided for it not to be. Even if Scotland had its own currency such as the $almond, people could keep their savings in £sterling.
As the Rev pointed out, we’ve already been through this scare story and it had no impact. Why should it this time.
When I last called at Morrison’s supermarket in Gibraltar to fill my tank with diesel (£1.08 per litre) and get some lunch I paid in Sterling notes – no problem for Gibraltar to continue to use Sterling. If I had dropped into Port Stanley, Falklands for a fish supper I would have paid in Sterling. Same with Jersey, Guernsey and the Isle of Man. I hope some journalist will ask Osborne and Alexander why they can continue to use Sterling while he tries to block it’s use in Scotland after 2016.
So even Newspapers are doing repeats? Yawn.
I agree with what’s been said, but having our own currency with Scotland’s assets and balance of payments would make our own Scottish currency a high value hard currency, which could hit our export markets like Whisky and food exports, and also make Scotland an expensive place to visit, hitting our tourism.
By the same token, the rUK pound would become a weaker currency benefiting their export market, although without our balance of payments contribution, this could be offset against the greater cost of borrowing.
I like the idea of having our own Scottish currency, very much so, but it’s something we should aim to have, work towards, and do the groundwork to restructure our economy to be ready for it. Let’s make it a choice, not a necessity. I fully expect the rUK Treasury and BoE would say the same thing.
More important than our choice of currency is our sovereign Independence. Without that, we are powerless and bound to the fate of the UK, and the future of our economy is not in our hands.
Ah, here is Edwardes’ quote in full:
“If the Cabinet do not have the wit and imagination to reconcile our industrial needs with the fact of North Sea oil, they would do better to leave the bloody stuff in the ground.”
I remember those words shocking the hell out of me at that time, as a 13 year old thinking Oil = Always Good.
@ Doug Daniel
“I sometimes wonder what would happen if the SNP suddenly said “okay, you’ve convinced us”
Heh, pulled that stroke in CiF this morning. The huge pachyderm in the room of course is the total lack of influence already enjoyed by the Scottish electorate on the BoE. How can retaining Sterling and treasury oversight, even in an interim period be any different to our current situation? Of course what we gain from independence in this period would be control over tax and spend. Its all in the priorities. 🙂
The unionists clearly don’t have a positive case to use to try and persuade Scots to remain in the union so they are relying on bullying and intimidating Scots into remaining tied to the sinking ship that is the British state – so whats new then?
Ordinary Scots have a long history of standing up to bullying and intimidation by their larger neighbour and this will be no exception.
Captain Caveman
Remember Eddie George, Gov of BoE thought unemployment in the North was a price worth paying for low inflation in the South. The BoE works only for “The City”
OT were you the Captain Caveman on Amazon who bought the Chinese N800 phone? If so, how did that work out in the long run
@Erchie
“Remember Eddie George, Gov of BoE thought unemployment in the North was a price worth paying for low inflation in the South. The BoE works only for “The City””
Please, please, please, NEVER mistake me as an apologist or supporter of the banks or financial sector. I *loathe* them/it for the worse-than-useless fraudsters and rip-off merchants that they are. If it were up to me, they would not have received one penny piece of public bail out money and hang the consequences – I said it then (to much derision from people who seemed to think they knew better) and I’m still saying it now.
So basically, I abhor these comments. Apart from anything else, I live in the North myself.
I totally agree that the BoE only acts in the interests of banks. But given that a huge, disproportionate number of these are Scottish, then insofar as the BoE actually gives a crap about any country, within the Union or otherwise, Scotland (incidentally) receives far more than its de facto share of BoE “support” IMO.
It wasn’t me with that phone btw mate – I’ve a 4S which is crap. 🙂
Captain Caveman
it can’t be denied that the current Scots economy is heavily dependent on volatile oil markets/exports and the financial sector.
—————–
And what …England wouldn’t if Scotland became independent. What about Germany, the US, France, Japan, etc….are they not dependent on oil and the Stock Market?
Every major country in the world is dependent on Oil and the Stock Market. If anything…for a small nation, we are punching seriously above our weight …and doing it well!!!
Captain Caveman
Where in the world are there small, oil-rich nations that ALSO have strong manufacturing/other export-led economies?
——————–
Norway, Sweden, Denmark, Netherlands, Belgium, Australia (20 mill population), New Zealand, Canada (25 mill pop.)….are a few I can think off immediately…
“Not sure about this; surely the BoE *does* act in the interests of the entire UK when taking decisions? Particularly since Scotland does have a disproportionately large banking/financial sector?”
In Treasury accounting terms, the “Scottish” banks were part of England. Their taxes were not attributed to Scotland.
http://www.businessforscotland.co.uk/why-did-the-banks-only-become-scottish-after-they-failed/
O/T The biased b.b.c are now allowing comments on the Osborne story and it is full of the usual anti Scottish tripe . Unfortunately I cant comment on the biased b.b.c from work but they could do with a lot if intellectual comments from W.O.S posters .
@JLT
Obviously, I meant “dependent” in terms of INCOME, not expenditure.
In terms of small, oil-rich nations with strong manufacturing, I don’t think many of your examples are valid, if any. (Canada is hardly a “small nation”!)
Do the Belgians, Swedes or Danes have oil? What significant manufacturing does Norway export? Australia is clearly heavily dependent on natural resource/ore export etc etc
What empty threat will be next? We’ll detonate all the trident missiles before we take them away?
Scottish Bank notes have Great Scots from history on them. The UK is petrified by the idea that one day people from an Independant Scotland could travel to England and force them to accept “GB Pounds” sterling with pictures of a certain great political leader on them.
That’s what it’s all about!
Sound as a Pound!
7. Not agreeing to a Currency Union would probably lead to a run on the Pound
In the event of a YES vote George and Danny would have a lot of explaining to do to the Money Markets.
They will have to explain how they intend to re-pay current debts and fund future borrowing having lost 9.9% of their income but only 9.3% of costs…..also £1.5 Trillion in Oil Reserves walking off the Balance Sheet….oh and given the UK Govt current legal position whilst it would inherit all the assets it will also accept 100% of the debt.
All of which is bad enough….but there is also the fact that Sterling will have shrank overnight by 10% which will almost certainly see investors fleeing Sterling…..on a larger scale than they did when Britain exited the ERM…..
Captain Caveman
But your argument is based on small Nations thriving with natural ‘Ore / Oil’ and manufacturing industries.
Canada population wise, is tiny, when compared to the size of their nation. They have roughly a population of 34 million (apologies, I thought it was 25 million) …seven times that of Scotland. That isn’t much compared to England (50 mill), Japan (100 mill).
In geographical terms, if we are taking the ‘sea-based’ waters around Scotland as its territorial right, then Scotland suddenly becomes a very large nation (as big as Germany, France and the Benelux nations put together).
Sweden and Denmark do have oil. Belgium however, survives with a small population through trade with its nearby neighbours …and it’s economy does rather well.
For what we have, I think Scotland does extremely well. If there is £3 trillion of oil in the seas, then if Scotland can extract it, and reinvest it in other industries, then I think Scotland’s future for the next few hundred years is safe. Better than being tied to Government in the South which has wasted, and I mean …wasted…so much money and opportunity. Instead, it seems to be get rich, sod the rest, and who cares what happens tomorrow. That’s London and Westminster thinking….and for me…stuff that !!!!
@RevStu
“In Treasury accounting terms, the “Scottish” banks were part of England. Their taxes were not attributed to Scotland.”
That’s an interesting article; I wasn’t aware of that. The disingenuous nature of banking, and bankers, never ceases to surprise me. However, and notwithstanding the patent fact that I am no expert in banking matters (thankfully), to my admittedly simplistic way of thinking, it is, and remains the case that in any “real world” sense, Edinburgh IS a major, disproportionately large financial centre and there are large “Scottish” banks.
The reason I brought this up was very specific to one element of my argument in this case, namely that the Scottish economy has been, and remains, disproportionately influenced by the financial sector and therefore, is disproportionately subjected to the (global, outwith local control and regulation) vagaries of it, just as for the exportation of oil. I feel this is fair comment and relevant to the wider discussion of how an independent Scottish economy would perform and to what extent it could be controlled by government.
This goes beyond the level of patronising guff we saw in 1979.
The unionist A team of Gideon, Alexander and ‘Sergeant Wilson’ Darling invoking Chicken Licken’s Law! On St George’s day of all days.
“The reason I brought this up was very specific to one element of my argument in this case, namely that the Scottish economy has been, and remains, disproportionately influenced by the financial sector and therefore, is disproportionately subjected to the (global, outwith local control and regulation) vagaries of it, just as for the exportation of oil.”
The point of that article is that the SCOTTISH economy wasn’t influenced by that at all, because it was never counted as part of the Scottish economy in any way.
“To be honest, this needs to be nipped in the bud once and for all. If I were the Scottish Government, I would start to make noises about a Scottish currency”
This would be a disaster. For a start, the papers aren’t attacking because they are proposing to use the same currency, they are attacking because they need a scare stories, and this is the choice this week. If the Scottish Government had announced a separate currency, there would have been headlines about “uncertainty”, “fear”, etc. etc. So it was no win.
Furthermore, any change in announcement now will be attacked as a U-Turn, showing that independence supporters don’t have any idea, unfit to run a country, uncertainty, fear etc. So that is a terrible idea.
And fundamentally, starting with a brand new currency on day one is LUNACY. Sure, we could adopt something different in a few years (I’d like to see us adopt the Euro down the line, but I appreciate that this is currently unfashionable), but that is a matter for the Scottish people and government of the future. The job of the current Scottish government is to get independence and sort out the first couple of years. Anything other than starting with Sterling is lunacy, and should be attacked as such.
The man at the centre of this? Osborne? Has this article previously been discussed? http://www.guardian.co.uk/politics/2013/apr/18/uncovered-error-george-osborne-austerity
@JLT
I don’t agree that Canada is in any sense a small nation but let’s not get bogged down with that one. Nor am I trying to suggest that Scotland is doing badly or whatever.
I have attempted to rebut some of the elements of Stu’s original piece, a keystone of which (IMO) is the assumption that Scotland could “control” its governance and economy, whereas I argue this is not reality when that economy is heavily skewed and very dependent on oil export markets and the financial sector. Similarly, he seems to argue that Scotland forming a currency union with the rUK would be beneficial to the rUK, whereas I have argued that it would very likely not be (and hence, why would or should the rUK sign up to such an arrangement, not motivated by spite but simple self interest), for the reasons I have stated.
I’d be interested in hearing any counter-arguments to my various points in their entirety, taken as a whole.
Peter de Vink did a good job debunking Kaye with an e this morning.
She couldn’t get him off the show quick enough 🙂
Good job, Peter.
it is, and remains the case that in any “real world” sense, Edinburgh IS a major, disproportionately large financial centre
In the real ‘real world’, Edinburgh ranks 54th in the Global Financial Centres Index, four places below Glasgow.
http://en.wikipedia.org/wiki/Global_Financial_Centres_Index
“The point of that article is that the SCOTTISH economy wasn’t influenced by that at all, because it was never counted as part of the Scottish economy in any way.”
Oh, agreed (at least in an “accounting sense”, not necessarily in a real world sense). However, that was the past; it certainly would not be the case in the future, in an actual full-fat divorce. All assets and liabilities (including ongoing past, present and future liabilities) would, no doubt, be split?
I can’t imagine any settlement where rUK gets lumbered with “Scottish” toxic, zombie banks and/or their assets?
Saved this from a comment on Better Nation (in its early days when it offered good articles). was impressed by the knowledge of Alasdair Stirling so I hope he doesn’t mind me reposting it here. Answers all the balance of payments questions.
“Alasdair Stirling Better Nation 02/06/2012 Keeping Stirling arguments: no. 1a
1. Oil payments
Whilst I tend to agree with the idea of an independent Scotland adopting its own currency, it is wrong to dismiss the SNP’s current ‘keep sterling’ policy. Australia, New Zealand and South Africa (to name but a few independent states) for 50 or more yeas after their independence from Westminster. The arrangement worked well enough for all parties. It succeeded because it was flexible in practice: the arrangement allowed the British to devalue sterling against the dollar twice and the Australians to internally devalue their pound against the British pound.
Moreover, Salmond makes a very good point about a ‘sterling zone’ being in the interests of the remaining UK. Were Scotland to adopt a currency other than sterling, rUK would have to purchase the vast bulk of its oil on international market in dollars and would immediatly have to find foreign exchange earnings (dollars) equilivient to 1/3 of its current earnings. Truth is that if an independent Scotland adopted a currency other than sterling it would plung the rUK economy into a very serious balance of payments crises.
Generally, a nation’s political independence comes about in one of two ways: conflict or negotation. Nations whose independence is brought forth in bitter conflict (e.g. America, Ireland or Algeria) have by neccisity to build every institution from scratch. On the other hand, nations who independence in a spirit of cooperation (e.g. Canada, Australia and New Zealand) have the option of retaining and using many of their previous political, social and economic arrangements. Retaining such links doews not invalidate a country’s independece (who thinks that Canada, Australia and New Zealand are really less independent than the Republics of South Africa or India).
1b. At the moment oil landed in the UK from the North Sea is worth circa £40 billion per annum (of which England, Wales and NI consume circa £36bn per annum). At the moment it is an internal market within the UK and any dollar requirement is offset by an equal and opposite contra trade back to sterling. After independence the trade in Scotland’s oil will be international and (unless Scotland uses sterling) there will be balancing contra trade and a rUK will have to find £36bn worth of dollars to purchase its oil from a non-sterling Scotland (or other foreign supplier). This sum is rougly equal to 1/3 of the current UK foreign exchange earnings.
Of course, not only does this oil trade cause rUK a balance of payments deficit. It similtainiously generates a Scottish current account surplus. The reality is that a seperate Scottish currency (say pegged to the dollar or a basket of currencies) would be an economic disaster for the rUK economy and I rather suspect that (despite Unionist scoffing) the rUK Chancellor will agree to almost any Scottish demand to keep us within a sterling zone.
It is an all too common mistake to consider North Sea Oil in terms of Govenment tax receipts. It’s real value is in the context of the balance of payaments and current account. Additionally, the dollars flowing into Scotland (remember we only consume circa £4bn of the oil landed) would generate the volume and flow of funds neccessary to develop a viable international capital market.”
Hpoe this adds to the debate
Limits of monetary policy
Speech given by
Spencer Dale, Executive Director, Monetary Policy, and Chief Economist, Bank of England
At the 44th annual Money, Macro and Finance Conference at Trinity College, Dublin
8 September 2012
“the financial crisis has taken monetary policy into uncharted waters” given very low Bank Rate and the scale of quantitative easing.
BBC News Headlines..
Scottish independence: Osborne says currency plans ‘dive into uncharted waters’
wondered where he nicked that expression from….
I can’t imagine any settlement where rUK gets lumbered with “Scottish” toxic, zombie banks and/or their assets?
In the real world, the banks – those that aren’t part owned by the UK – are neither Scottish nor British and their assets and liabilities would form no part of any settlement. For the ones part owned by the UK, I can see no reason why the rUK wouldn’t get lumbered with their fair share of what they already own.
Thanks Stu, for giving us the short and to-the-point riposte we need to direct our BT-minded friends to!
I am going to vote yes next year come hell or high water, I just believe it is the right thing to do for Scotland and for it’s people. What I fail to understand is why unionists think there will still be a UK after we dissolve the union. Unless of course they remember that it was the Scots who unified the Crowns in 1603.
“The idea that the BoE would ever act (or has ever acted) in Scotland’s interests if they ran contrary to those of England is quaint, to say the least. It would be an appalling dereliction of its most basic duty.”
If you replace BoE with Westminster I’ve always thought this is almost the entire argument in a sentence.
Captain caveman, you asked what manufacturing Norway exports, first of ship building , rig building ,timber products,I speak to Norwegian cousins daily on social media and all say the same thing , take independence ,look at us we have done well, and so Norway has , yes its expensive to British to visit but for those staying there the wages and benefits far out weigh ours and they are out of the immediate euro zone ,
I was heartened by a few callers on Call Kaye today especially the male who basically said to investigate everything said on the independence debate , then came out with the Isle of Man statement , this caught Ms Adams with her drawers down and the back pedalling began by saying she didnt know this was the case and that is the problem , this has to be shown to the public in general that information that supports a currency union is out there but you have to research this yourself when the YES campaign should be sending out leaflets like NNS myths debunked with more points to households in Scotland ,this is ours to win but it will need a co ordinated effort from now until referendum day for this to happen.
OT/ Another thing I would like to hear about is the SGs answers on fishing and taking this to the north east as they re losing swaithes of crews due to efforts being made by Marine Scotland and aided by the SG with rules which unfairly target our fishermen while allowing “foreign”nations and I include English registered vessels a free reign in Scottish territorial waters where scots boats are not allowed to fish closed areas while our neighbouring nations can, the industry also needs more input with proposed marine parks in the name of conservation especially on the west coast where the vast majority are small inshore vessels that cant change grounds unlike the more modern east coast fleet.
Back on topic I think the Scots government should stay with sterling for the first five years at least while setting up a new Scots monetary set up and investigation for a pegging to either sterling/krona/euro or dollar
H
I have never been so sick of anything for a long time than I am of this today.I cannot understand why the Government do not make the decision if this is the view from Westminster then so be it we can go elsewhere and start talking to others I would rather go down fighting on our terms than listen to any more of this continual carping It might focus the minds of those on the other side of the border We cannot be so undesirable that another currency would not welcome us with open arms.How have other countries managed to work out their independence without this rancour being thrown at them at every turn
A currency union makes sense for everyone in the short term & Flipper Darling knows it.
Later, we can decide to retain the pound & our distinctive bank notes or change them for something else.
As long as the shops accept them, I dont care what they are called.
My own suggestion is the Scottish Scrotum or Scrotti (Plural); every transaction in England will mean asking someone to handle my nutsack in exchange for some English money.
John Swinney shows Osbourne what a pair o baws looks like
“What the Treasury paper is designed to do is to make things sound as difficult and as obstructive as possible. I don’t really think it is a particularly helpful contribution to the debate.
@Wullie B
Well, this is what Wiki has to say about the economy of Norway:-
‘The economy of Norway is a developed mixed economy with heavy state-ownership in strategic areas of the economy.
Although sensitive to global business cycles, the economy of Norway has shown robust growth since the start of the industrial era. Shipping has long been a support of Norway’s export sector, but much of Norway’s economic growth has been fueled by an abundance of natural resources, including petroleum exploration and production, hydroelectric power, and fisheries.
Agriculture and traditional heavy manufacturing have suffered relative decline compared to services and oil-related industries, and the public sector is among the largest in the world as a percentage of the overall gross domestic product. The country has a very high standard of living compared with other European countries, and a strongly integrated welfare system.
Norway’s modern manufacturing and welfare system rely on the financial reserve from the resourcefulness exploitation on the North Sea oil.’
Meant to attribute this quote from JS instead
“If that’s his position, then the UK as the successor state is obliged to hold on to all of the debt. We would be liberated from a population share of UK debt of £125 billion.
If that’s the kind of game of negotiation the Chancellor wants to play, he’s welcome to do that.”
(AwNawSmileythingy)
Who is Captain Caveman?
This is just another attempt by the Unionists to divert attention from the ‘big picture’.
The UK’s borrowing is dependent upon current and future revenues therefore, to remove oil, gas, banking and all taxes to an independent Scotland weakens the UK’s borrowing power. In a currency union, the BoE would impose strict measures and targets on GDP, inflation and other fiscal and monetary policies for both Scotland and rUK.
Therefore, the Unionist’s problem with any fiscal sustainability agreement is that it would require financial discipline on the part of Westminster over net borrowing and debt to be able to provide the flexibility required to develop policies for rUK to promote growth and maintain economic performance. The Unionist’s recognise that Osborne, Alexander and Balls are not up to the task.
On the further macro level, the removal of nuclear weapons would impact rUK’s seat at the high table and, the removal of this seat makes it even harder for rUK to gain beneficial terms in borrowing or influence.
I could go on but, suffice to say, there is no positive case for union and so the only arguments will be ‘too wee, too poor and too stupid’. They can call it whatever they like, and throw out these ill-conceived ignorant statements, but it’s still just self-preservation for fear of being found out by middle-England.
@Weedeochandorris
“Who is Captain Caveman?”
No one important, that’s for sure. 😀
(I’ve known RevStu for about 10 years online. We’ve argued vociferously about stuff in all that time, but in the final analysis, you can’t fault a bloke who loves Ridge Racer).
If we suggested a change of currency at this point, it would be like manna from heaven for the scaremonger campaign.
Pensions in doubt, wages won’t be paid, bla bla bla.
Keeping the pound is about reasuring the population that they will be safe, but once the people see how well our new independant nation is doing, they will quickly trust the government to do what is in our best interest.
If a new Scottish currency is in our own self interest that is what we will do.
It’s not complicated, so don’t let the scaremonger campaign put the jitters up you.
Oh and as far as I can see Captain Caveman is a Unionist, who argues his own case sensibly and is therefore treated with the utmost respect on here, although his arguaments usually fall appart, so I can’t see him remaining a Unionist for too long.
So let our Caveman enjoy his Unionism while it lasts. 😉
“although his arguments usually fall apart”
O/T
Well, that’s the story of my life mate. 😀
Thanks for your comments anyway; I have “L” plates on here without doubt and by my own ready admission, seriously lack knowledge in these debates/discussions, in many instances. Nonetheless, I am interested.
Seriously though, you guys need to find yourselves a better, more competent Unionist. 😛
Telegraph today “George Osborne: Independent Scotland with pound ‘would have say over English economy”. http://www.telegraph.co.uk/news/uknews/scotland/10012641/George-Osborne-Independent-Scotland-with-pound-would-have-say-over-English-economy.html
@ captain caveman
Seriously though, you guys need to find yourselves a better, more competent Unionist.
who do you have in mind, Alistair Darling, Danny Alexander, Osborne, jeez the list of talent is endless .
@ captain caveman – never got past pac-man myself.
Getting to the nitty gritty. “The Chancellor said Alex Salmond’s plan for a eurozone-style currency union after separation would mean Scotland having influence over tax and spending levels in the remainder of the UK.
He questioned why a country of around 58 million people “would give away some of their sovereignty” to a different nation with a population of only five million.
Speaking in Glasgow, he said any British Chancellor would have to provide the English, Welsh and Northern Irish with a “clear and compelling answer” to this question.”…………
Is it just me or are there others who think that the word has gone out, we’re going to go big on George’s treasury report.
Unionists who seem to have being queuing up to get their comments into the Scotsman, even a mention on BBC’s main news, of course there was only comments and persons from the unionists side allowed but!
You might think that somebody somewhere would remind folk that HM treasury is actually a government department and therefore subject to the same unionist bias as the rest.
Or am I just paranoid?
Shouldn’t people be worrying about what has happened to sterling here and now? When growing up in Canada in the 60’s our Scottish grans would send us a pound or two with our birthday cards. At first this was a happy occasion but we learned after a few years to rush to the bank to exchange it as the pound constantly devalued against the Canadian dollar. Around this time the UK basically went bankrupt under Wilson. The current clowns at the financial helm are doing no better. When you tie yourself to a foreign currency you are mortgaging your power to choose your own economic path. Although there may be sound political reasons for a temporary use of sterling, it should not be for too long as that would be tying yourself to the helm of a sinking ship while watching the rats scurrying off as fast as they can.
However there is another option – since the head of the bank of England is now a Canadian and most of the people in London with real money Russian oligarchs – let the SNP reach out to the financial incompetents on the banks of the Thames and lend them John Swinney for the duration of the pre-referendum period and the 18 month changeover after the Yes vote in the referendum. It could be a parting gift as it were – and help the struggling land to the south see that as incompetent as its leaders were noone to the North is holding a grudge.
Anybody know if Osbourne travelled up to Scotland by first class rail ticket? Just asking like.
The Unionists are deliberately conflating ‘fiscal’ policy (tax rates, government spending) with ‘monetary’ policy (control of money supply) for their own nefarious ends. I’m not an expert mind, I merely looked it up on the internet, but the last thing the Unionists want (apart from Captain Caveman, apparently), is an informed debate.
Alex Salmond was quite good on it today on the BBC.
http://www.bbc.co.uk/news/uk-politics-22266479
Captain Caveman,
I, like you, am no expert on the details of this argument and I understand your request to consider the general thrust of the arguments you are making against the points raised in Rev Stu’s original article.
I have read your points along with the answers by other posters to them and although very interesting as a debate, I feel that you fall into the trap that most Unionists do when they insist on using the past and current failures of the UK and it’s management (including the balance) of the current UK economy as evidence of the same certain failings in a future Scots Indy economy.
It is to change these failed economic policies and governmental decisions that plays a large part in my desire for a Democratic Independent Scotland to take control of it’s own economic output and create a balanced economy suited to the desires and well being of it’s citizens.
How we go about achieving that conundrum will be up to ourselves and our own ingenuity in negotiating our place in the world, just like every other Nation. I am not scared and feel secure in our abilities and resources as a nation to achieve this.
Sorry but that is about as general a point as I can make. (smily)
“It is currently obliged to act in the best interests of the entire UK – which in practice means England because around 90% of the population of the UK is English”
But economically England isn’t one big homogenised group, there are many parts of England where the economic concerns and issues are very similar to those in Scotland and totally divorced from the economic issues of London and the South-East.
If they ran contrary to each other (which it could well be suggested that they do, given the economic disparities) would the BoE act in the best interests of London and the south of England, or in the best interests of the larger population in the midlands and north of England, Scotland, Wales and N.Ireland?
“Anybody know if Osbourne travelled up to Scotland by first class rail ticket? Just asking like.”
What he usually does is get a second class rail ticket and then tries to travel in first class anyway.
@Norsewarrior-
Have you caught up with the Lamont/Millar interview yet?
Was watching BBC Misreporting Scotland at lunchtime and the pound sterling scaremongering shite was of course given top billing. The gloom and doom was, of course, as is the BBC’s wont, laid on thick.
But what, to me anyway, stood out a mile was the ‘The people of Scotland are waiting for answers from the SNP as to what their intentions are regarding the pound. And, in general, answers to what independence means for Scotland’-line!? FFS, the people of Scotland are ‘waiting for answers’ because you, BBC, and your fellow-conspirators in the UK-media won’t tell them the answers!
Here is the BBC with all the money it receives from the likes of those in Scotland who are subsidising them with their paying of a licence fee under threat of a court order, which wilfully refuses to provide more information on why the Scottish government believes that using sterling in the interim upon independence is the most sensible thing to do. If there was any semblance of balance and impartiality within that organisation they could at least do something similar to what Stu has done here to give some of those ‘answers’ the people are supposedly waiting for. They could even use their money to provide some snazzy graphics for a better visual effect. Chance would be a fine thing, of course.
All-in-all, it just proves once again that the UK-media are not willing to provide the truth about any subject regarding Scottish independence. The truth will only be found on the internet on sites such as WoS, and it will be thanks to sites such as this that the referendum will be won.
“If they ran contrary to each other (which it could well be suggested that they do, given the economic disparities) would the BoE act in the best interests of London and the south of England, or in the best interests of the larger population in the midlands and north of England, Scotland, Wales and N.Ireland?”
You know the answer to that. And your arithmetic may be questionable.
“You know the answer to that. And your arithmetic may be questionable.”
So the BoE doesn’t always act in the interests of the largest population, it acts in the interests of the largest economy.
My arithmetic isn’t questionable – the population of Scotland, Wales, N.Ireland and the North and Midlands of England combined is larger than the population of London and the South of England (including East Anglia), by quite a wide margin in fact. Its about 28 million compared to about 35 million.
“Have you caught up with the Lamont/Millar interview yet?”
No I haven’t. Why are you so desperate for me to watch it?
“My arithmetic isn’t questionable – the population of Scotland, Wales, N.Ireland and the North and Midlands of England combined is larger than the population of London and the South of England (including East Anglia), by quite a wide margin in fact. Its about 28 million compared to about 35 million.”
That depends where you’re drawing the line, and on a ludicrously specific instance whereby the economic benefit of something flips diametrically somewhere outside Coventry. It seems an unproductive and pointlessly pedantic line of discussion. Don’t make me regret questioning whether you’re a troll or not.
“on a ludicrously specific instance whereby the economic benefit of something flips diametrically somewhere outside Coventry”
But isn’t that the same thing as flipping the economic benefit of something diametrically just after Berwick? As in suggesting the BoE acts in the interests of anyone south of the border and against the interests of anyone north of it?
I’m sure you’ll agree that the economic issues and concerns of people in somewhere like Newcastle are likely to be far more similar to the economic issues and concerns of Glaswegians than they are to the economic issues and concerns of those in the South-East?
“I’m sure you’ll agree that the economic issues and concerns of people in somewhere like Newcastle are likely to be far more similar to the economic issues and concerns of Glaswegians than they are to the economic issues and concerns of those in the South-East?”
Whether I do or not has no bearing on the core point.
@ Norsewarrier,
I don’t think you can use the English Midlands as a geographical area, that is similar to North England, Scotland and Wales, the Midlands are much more like London, than North England.
The population of the West Midlands just around Birmingham is more than the whole of Scotland, so has political importance for any National Party who wishes to get elected.
The other three areas of Northern England, Scotland and Wales, do not get served well, by the policy makers who are inevitably based in London.
It’s not just that they don’t get the Scots/Welsh/Northerners, as the media suggests, it’s just political expediency.
There’s a limited ammount of money to spend and if you spend it further South their’s a good chance you will get re-elected, spend it p North, you will probably not get re-elected.
Offered these choices, what do we think most politicians would do?
‘1b. At the moment oil landed in the UK from the North Sea is worth circa £40 billion per annum (of which England, Wales and NI consume circa £36bn per annum). At the moment it is an internal market within the UK and any dollar requirement is offset by an equal and opposite contra trade back to sterling. After independence the trade in Scotland’s oil will be international and (unless Scotland uses sterling) there will be balancing contra trade and a rUK will have to find £36bn worth of dollars to purchase its oil from a non-sterling Scotland (or other foreign supplier). This sum is rougly equal to 1/3 of the current UK foreign exchange earnings.’
Sorry, I just don’t understand this? (It’s a key point as regards the benefit to rUK if an independent Scotland retained Sterling).
Surely, even if an independent Scotland retained Sterling, oil tax revenues would be payable to Scotland and Scotland alone – the currency used is irrelevant? The rUK would still have to buy its oil from Scotland or anywhere else, regardless. Sorry if I am being thick but I still don’t understand how the rUK benefits by having an independent Scotland sharing the same currency, especially if formally tied into a common monetary zone, whereby as I’ve said, the pound could strengthen as a result of oil earnings/potential/underpinning, very possibly to the detriment of rUK which could favour a weak currency – much like Greece, Spain, Ireland et al are haplessly tied to a strong Euro whereas their own weak currency, with potential QE measures, would actually suit them far better economically?
“Whether I do or not has no bearing on the core point”
I’m not disagreeing with your core point at all – there’s no doubt that the BoE wouldn’t act in Scotland’s interests if they ran contrary to the interests of London and the South-East.
I’m just suggesting that its perhaps unfair to lump the entire population of England into one economic interest bracket, when many of them are far more likely to have similar economic interests to Scotland than to London and the South-East.
“I’m not disagreeing with your core point at all”
Then why bother with pedantic semantic nit-picking? The BoE is obliged to act in the interests of the greatest number. That will never be Scotland, by definition. The best Scotland can ever hope for is that its interests coincide with those of tens of millions of English people, and it doesn’t need anyone on the MPC for that.
‘I feel that you fall into the trap that most Unionists do when they insist on using the past and current failures of the UK and it’s management (including the balance) of the current UK economy as evidence of the same certain failings in a future Scots Indy economy.’
All I am trying to suggest is that the failures of the UK (collapsed banking sector) points to a potential “risk factor” for future economies which are heavily reliant on that sector, as Scotland’s is (and an independent Scotland’s would be). Further, I’m suggesting that such things are not actually entirely within the gift of any one government, especially for a relatively small state – there are plenty of examples of that.
Honestly, this isn’t intended to sound like yet another rehash of the ‘too wee…’ type argument (or scaremongering) and categorically, this isn’t what I am trying to say or do here. I merely question some of the basic assumptions that Stu makes in his original piece.
I think AS well recognises the current vulnerability of an indy Scots economy and the long term need to diversify, which I assume is driving his intent to lower Corporation Tax rates in order to attract new industries, commerce and businesses, and attract further investment in existing ones. All very sensible IMO.
I still don’t see what would be in it for the rUK though, for us and an independent Scotland to form some – or any – kind of monetary union or similar.
“All I am trying to suggest is that the failures of the UK (collapsed banking sector) points to a potential “risk factor” for future economies which are heavily reliant on that sector, as Scotland’s is”
But in fact, you’ve been fairly clearly shown that Scotland’s ISN’T. Basically none of the proceeds (or debts) of the financial services sector show up on Scotland’s balance sheet. And it’s probably safe to say that in an independent Scotland’s case at least, the mistakes of that particular sector aren’t going to be allowed to be made again any time soon.
‘But in fact, you’ve been fairly clearly shown that Scotland’s ISN’T. ‘
Disagree. Whether or not banking “revenues” were, or were not actually attributed to Scotland by the UK government as some bullshit accounting exercise or other matters not one whit to me or my argument. The plain fact is, as far as I’m concerned at least, Scotland very definitely does have a major element of its economy rooted within the banking and finance sector, and has done for many years.
‘Basically none of the proceeds (or debts) of the financial services sector show up on Scotland’s balance sheet.’
They don’t show up on THAT balance sheet, sure. I’m not trying to argue with facts. However, I seriously doubt that this assessment would hold so much as a single droplet of water, in any divorce settlement/talks and apportionment of legacy debts/liabilities of the banking sector. To assume that, just because this ‘balance sheet’ is out there, that this will be some Get Out of Jail Free Card that trumps everything else (including actual reality) seems naive to me. As even I can appreciate, it would not play out like that.
‘And it’s probably safe to say that in an independent Scotland’s case at least, the mistakes of that particular sector aren’t going to be allowed to be made again any time soon.‘
Ah, this is the nub of my entire argument and its the ONLY reason I even brought any of this up (i.e. I did not want to spark some wider debate about what Scotland’s “share” of the debt/liabilities would or would not be etc.). I argue that is is NOT a case of Scotland’s individual government – or anyone else’s for that matter – being able to singlehandedly control the entire global financial system and all its vagaries and risk factors. Inevitably, the ‘big powers’ like the US, and how they choose to regulate and control their banks, or not, would inevitably have a major external effect (as before); this being entirely not within the gift of Scotland to control. Basically, the financial sector is ‘well dodgy’, is what I am arguing, and any economy which depends on it to any great extent – for employment and revenue – is surely exposed to these external risk factors that are nothing to do with ‘good governance’ of a future Scotland, which is simplistic IMO and what you seemed to be suggesting.
@Dal Riata
Was watching BBC Misreporting Scotland at lunchtime and the pound sterling scaremongering shite was of course given top billing. The gloom and doom was, of course, as is the BBC’s wont, laid on thick.
But what, to me anyway, stood out a mile was the ‘The people of Scotland are waiting for answers from the SNP as to what their intentions are regarding the pound. And, in general, answers to what independence means for Scotland’-line!? FFS, the people of Scotland are ‘waiting for answers’ because you, BBC, and your fellow-conspirators in the UK-media won’t tell them the answers!
Here is the BBC with all the money it receives from the likes of those in Scotland who are subsidising them with their paying of a licence fee under threat of a court order, which wilfully refuses to provide more information on why the Scottish government believes that using sterling in the interim upon independence is the most sensible thing to do. If there was any semblance of balance and impartiality within that organisation they could at least do something similar to what Stu has done here to give some of those ‘answers’ the people are supposedly waiting for. They could even use their money to provide some snazzy graphics for a better visual effect. Chance would be a fine thing, of course.
All-in-all, it just proves once again that the UK-media are not willing to provide the truth about any subject regarding Scottish independence. The truth will only be found on the internet on sites such as WoS, and it will be thanks to sites such as this that the referendum will be won.
Lets be honest, Pravada are supporting the No campaign. We know it and they know it as well. Their statement about not having to be balanced until the official campaign says it all. They have always been hostile to the SNP, and the Yes campaign is likely to be treated in a hostile manner as well, at least privately. The line that they are waiting for the SNP to give them answers has two main flaws.
Firstly, it deliberately conflates the SNP with the entire Yes campaign, which we know is a Unionist tactic designed to give the impression that independence has less support that it does have in reality. Secondly, it demonstrates their lack of impartiality as they clearly believe that they do not need to scruntise the No campaign. They believe that all the answers should come from the Yes campaign. For example, many people in Scotland know that the rise of UKIP in England means we are heading out of the EU if there is a No vote in the referendum. This has hardly been mentioned by Pravada. Like the Taylor donation, they have not directed any questions to Darling about this.
@Norsewarrior-
“Have you caught up with the Lamont/Millar interview yet?”
No I haven’t. Why are you so desperate for me to watch it?
I was hoping you might deal with the important questions raised by that interview, and Lamont’s behaviour.
For anyone genuinely interested in the referendum the Taylorgate scandal is real, serious, and ongoing. The Lamont/Millar interview raises many more questions than it answers – you don’t want to know what those questions are, let alone seek answers?
In fact Stu, this is what AS himself had to say in 2008, word for word:
‘…”of course we Scots are lucky enough to have the one of the best brands in the world – a global recognition and affection for our culture that money cannot buy. Take financial services. With RBS and HBOS – two of the world’s biggest banks – Scotland has global leaders today, tomorrow and for the long-term. And a growing number of American firms – not least JP Morgan, Morgan Stanley and State Street – are discovering that the Scottish financial sector can do anything you can do in London and can do it better and rather importantly in the current environment can do it at lower cost. …”
So in all fairness, it seems that AS very much believes RBS and HBOS to be Scottish, not to mention the importance of the Scottish financial sector in general to Scotland and her economy.
“So in all fairness, it seems that AS very much believes RBS and HBOS to be Scottish, not to mention the importance of the Scottish financial sector in general to Scotland and her economy.”
All Salmond talks about in that quote is brands. I can’t fathom how you think this “importance to the economy” of the Scottish financial sector manifests itself. It pays no tax to Scotland – indeed, it sucks money OUT of Scotland and sends it to London. It provides a decent amount of employment, but so do lots of other industries. The Scottish balance sheet, as it is currently calculated, would be almost totally unaffected if all the banks fled to London in the event of a Yes vote (because their branches, providing much of the employment, would still be here).
If they stayed in Scotland, on the other hand, things would be better for the Scottish treasury than they are currently. because they’d suddenly be paying tax on profits. It’s pretty much a no-lose scenario.
@ Captain Caveman,
For the purpose of understanding this. You must put the Taxation raised by Government from oil to one side. Its simply not relevant here.
All International oil and Gas transactions are conducted in US Dollars – this is true the world over. At present the oil used by rUK isn’t purchased on International markets – its produced from within Scottish waters. Scotland at present is part of the UK.
Following Independence for Scotland, that oil (90% for sake of argument) comes from Scottish waters – no difference up to now.
Here is where things start to change.
rUK needs circa £36 Billion pounds worth of oil. Whether it buys it from Scotland or Timbuktu it will be paying for it on the international markets (US Dollars) It is now an import.
Consider for a moment the change that will have on the Balance of Payments (imports balanced by exports)
Now – little old Scotland now has exports available worth £36 billion, on selling these yearly assets Scotland would get a windfall of foreign currency investment in US Dollars. The trick for Scotland is to balance that figure out with imports of a similar value. Scotland now has a huge yearly windfall.
If Scotland shares Sterling with rUK then the balance of payments within Sterling will be unchanged.
If Scotland had its own currency, then none of its exports help the Sterling zone as it has a Huge deficit.
If the total of Scotland’s exports contribute 35 – 40 % of exports for UK Sterling zone are lost due to an Independent Scotland having a different currency then the banking crises that we have seen to date will look like £10 going missing from petty cash by comparison. rUK would be F***ed.
The rUK financial markets and GBP value would heavily lurch downwards – money would be pulled out of rUK faster than you could imagine – remember what happened to Northern Rock?
These unionists are strange folk when it comes to financial reports, here is this one which alleges that our economy is doomed if we vote YES and want to keep the pound in the suggested manner and which is getting shouted about from the rooftops, yet wasn’t there another report produced by one of their experts that was so frightening in how good things could be for an independent Scotland that they hid it away, oh yes, the McCrone report!
I do wish they would make their minds up.
Back to my paranoia, it seems strange to me that whilst the unionist media is bigging up ‘their’ report, that the one’s the Nicola Sturgeon refers to, which can be linked to from the SNP site and which are independent don’t get a mention.
Strange or what?
@ Captain Caveman,
In fact Stu, this is what AS himself had to say in 2008, word for word………
To be fair to Alex Salmond, he makes a point of mentioning Tunnock’s tea cakes and Caramel wafers, even although the company is run by a known unionist. When AS promotes Scotland abroad or at home the only thing that concerns him is making Scotland a good place to do business. He is doing all he can to encourage companies from abroad and here to invest in Scotland, take on Scottish workers and invest in the future. All TAX receipts gained at present go to London, but jobs in Scotland and growing it’s economy is the main goal both short and long term.
@RevStu
“All Salmond talks about in that quote is brands. I can’t fathom how you think this “importance to the economy” of the Scottish financial sector manifests itself.”
Well, I honestly don’t agree with your interpretation of Mr Salmond’s meaning but it doesn’t matter as it’s not relevant here. But as for the importance of banking to Scotland, surely it’s valid to talk about the number of banking jobs there are in Scotland? I went to Edinburgh airport a couple of weeks back (since I do a lot of business in Scotland which partly explains my own interest in all of this, despite being English (well, sort of)) – I could not move for signs saying “Edinburgh – home of RBS” or similar. I mean, I cannot talk authoritatively about the UK government balance sheets that you refer to, but surely “real stuff” like this and much more besides cannot simply be ignored?
“It pays no tax to Scotland – indeed, it sucks money OUT of Scotland and sends it to London.”
That might be true (but even then, I imagine there’s a whole localised support industry built around those banks/banking centres) – but would this be true for an independent Scotland, with its own hived off ‘all Scottish’ banks? There’s much talk about regionalised, broken up banks right now in the media. In the case of RBS and HBOS, these are largely UK government owned and they continue to lose vast sums. I can’t see rUK assuming liability and ownership of all these, in their entirety, despite a clear “real world” Scottish legacy issue.
“The Scottish balance sheet, as it is currently calculated, would be almost totally unaffected if all the banks fled to London in the event of a Yes vote (because their branches, providing much of the employment, would still be here).
If they stayed in Scotland, on the other hand, things would be better for the Scottish treasury than they are currently. because they’d suddenly be paying tax on profits. It’s pretty much a no-lose scenario.”
The key phrase there, I think, is “as it is currently calculated”. But obviously, this calculation relates to a single, unified Union state and it’s entirely fair to say that it would not be calculated like this in the event of a full and final divorce? I’m also not sure about that no-lose scenario, either. As I’ve said (and as is fairly obviously the case), RBS and HBOS have, in addition to having demonstrably cost the UK taxpayer unimaginable sums of money thus far, still continue to make huge losses and incur yet further liabilities? (As for their previous “profits”, well, we know now how real these actually were).
@Adrian B
Many thanks for your patient explanation, though I’m ashamed to admit I still don’t understand why Scotland adopting the Pound would be a benefit (or for that matter it not doing so would be such a disbenefit). It seems to me that in either case, rUK still pays £36Bn for its oil – how is the balance of payments unchanged if Scotland, an independent country, happens to trade in the same currency?
I suppose rUK could just print £36Bn in QE each year to pay, thereby diluting and causing inflation to both the rUK and Scottish economies; probably what the BoE would do, knowing them.
“But obviously, this calculation relates to a single, unified Union state and it’s entirely fair to say that it would not be calculated like this in the event of a full and final divorce?”
I don’t think you quite get how GERS works. Clearly the Scottish budget would be calculated differently as an independent state, but to an overwhelmingly positive effect. We’ve run many features here explaining why in detail – start by clicking Scott Minto’s name in the Contributors tab or tag cloud.
“In the case of RBS and HBOS, these are largely UK government owned and they continue to lose vast sums. I can’t see rUK assuming liability and ownership of all these, in their entirety, despite a clear “real world” Scottish legacy issue.”
That’s a matter of negotiation, but any Scottish share of the liabilities would be proportionate. It’s generally assumed that independent Scotland will start off life with a share of UK debts, and that’s not particularly a problem.
“(As for their previous “profits”, well, we know now how real these actually were).”
Whether the profits were real or not, the taxes paid on them very much were.
Captain Caveman,
Two instances of the point I was making.
1. Scotland’s past and current economic over dependence on the banking sector (as perceived in your argument) was in large part brought about by the laissez faire regulatory regime under which it became very profitable to move banking business focus and assets into the more risk taking sectors and away from the ‘old steady as you go’ bank manager interview side of the industry.
As this was (and is generally acknowledged to have been) in large part brought about by a series of governments (if not a single politician) under the name of Thatcherism, why do you doubt the possibility of a similar transformation, by a similarly ‘formidable’ and popularly supported future Scots parliamentarian in the reverse direction?
2. When discussing the balance of an economy, surely just as important to the equation are the many sectors which were in actual fact slaughtered to make way for the new credo.
The Scots (and UK for that matter) economy is out of balance because we have had no governmental incentive to keep our Industries, let alone grow them. Outside of enticing other countries car industries and Steel making companies into hiring people in Britain to take advantage of access to our European market, I can see no industrial strategy in UK governmental policy from the last 35 years.
Take note, this is not proof that a strategy cannot be formed and acted upon by an effective and motivated Indy Scots Government.
I understand that you are posting in good faith and I have not accused you of the ‘too wee, too poor etc..’ crap that is usually fronted as the ‘positive case’, but I am amused that you yourself raised the need to deny it so early on (and unprompted).
I enjoy your posts and the responses that they garner and hope that you continue to take the time to question the articles and comments made here. Could I ask (honestly) however, why you doubt the ability of Scots, given all their abilities and access to all their resources to not make a success of their future?
“Could I ask (honestly) however, why you doubt the ability of Scots, given all their abilities and access to all their resources could make a success of their future?”
Just to briefly respond to this before I’m out the door: I absolutely and unequivocally don’t doubt it mate, honestly.
It seems to me that in either case, rUK still pays £36Bn for its oil – how is the balance of payments unchanged if Scotland, an independent country, happens to trade in the same currency?
The balance of payments would be unchanged within the Sterling zone as we would share the same currency.
Take Scotland out of that currency and the balance of payments figures would almost implode inwards – disaster for rUK. Balance of Payments is a measure of how good or bad an economy is doing. Tilting it in one direction softens currency values, tilting it in the other hardens currency values. Having a currency roughly in the middle is good for import and export affordability at home and abroad.
See if reading the following link helps, (A Simple Analogy) seventh link down from “Index”
http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/Publications_Archive/Background_Papers/bp9697/97bp5#SIMPLE
Remember that rUK doesn’t just lose oil trading values of Scotland. Food and drink figures are particularly strong and high in value too.
Ewan Crawford ?@ewansc2h
Interesting fact from UK Gov currency paper: Norway’s economy twice size of Scotland’s. Similar population, both oil rich; 1 is independent
https://twitter.com/ewansc
Norsewarrior and Captain Caveman posting in the same thread?! Have mercy! (just kidding CC).
Captain Caveman,
So what’s the problem then?
Gngh! I’m sending my missus round here for an explanation why I am late for tea. 😀
But seriously, there is no “problem” at all. I don’t think it’s contradictory to be a Unionist but not to think that Scotland would somehow be incapable of making a success of independence and/or not to doubt their abilities…? Or is that just me?
Very briefly, if I were a Scot, my main issue with the Indy proposal wouldn’t be from within Scotland at all – it would lie with third parties, particularly the EU (and those entities within it who have a vested interest to make life difficult for the birth and ongoing success of an independent Scotland), among others. As well as, if I’m honest, a lack of clarity and detail of such proposals on the part of the SNP (but not that they’re alone in this kind of thing, far from it).
Very briefly, if I were a Scot, my main issue with the Indy proposal wouldn’t be from within Scotland at all – it would lie with third parties, particularly the EU (and those entities within it who have a vested interest to make life difficult for the birth and ongoing success of an independent Scotland)
We would double our representation within the EU and would have much more involvement in shaping the EU.
Dodgy EU (Farage?) politicians aside, there is actually much for other countries to welcome from Scotland being in the EU, very little reason to cause problems. Just because the UK press view the EU with distrust doesn’t follow that others view Scotland as untrustworthy.
The EU countries mock the UK for Westminster’s distrust of the EU.
and russia says…..http://rt.com/business/independent-scotland-lose-pound-259/
rev what do the last paragraphs mean?
Captain Caveman,
Sorry and thanks for your dinner delaying answer. I think that we simply differ in our perceptions of ‘the big bad world out there’ and our (Scotland’s that is) ability to turn whatever we encounter to our advantage.
Do you feel it would be safer or make more sense for the UK to share more sovereignty and closer integrate with Europe for similar reasons?
I must say you do seem pleasingly detached when debating on here (something that I am sure takes a will of steel) and I admire you for it. In my experience a real debate between settled YES and NOs is very, very rare and a real pleasure when encountered.
I personally don’t give a ha’perth if we have to use ‘wampum’ for money, I’m still going to vote YES goddammit.
I personally don’t give a ha’perth if we have to use wampum for money, I’m still going to vote YES anyway goddammit.
Just found this one from Jan 2013 too. –
Alistair Darling backs currency union between Scotland and rUK
http://www.newsnetscotland.com/index.php/scottish-politics/6549-alastair-darling-backs-currency-union-between-scotland-and-ruk
One has to keep track of these things tight.
Braco – glad to see you’re back on WOS. Was your job hunting project successful? Hope so. 🙂