Alex Salmond as usual wants lots of cake, has eaten it already, and wants to eat it again and again.
Not so the Pound and the Bank of England [Alex - the clue is in the name]
If Scots want to go independent then they have to find another currency - the dreaded Euro being the currency that dare not speak its name.
European Leader Barroso has warned that Scotland would not be automatically eligible to stay in the EU either – let alone join the Euro – it raises an awkward question as to what these independent Scots would use to pay the bills.
The SNP want to stay in the sterling zone. ‘Our preference is to use sterling”, says John Swinney, the SNP finance spokesman, “and no one can stop us.” True; no one can stop the Russians using it either. No one stops us using the rouble. As George Osborne said today, no one stops Panama using the US Dollar. But it’s better, of course, to use a currency over which there is some degree of national control.
This morning, Osborne had this to say to BBC Radio 4:
"Britain has taken a decision not to join currency zones like the Euro. Britain has had a poor experience with things like the ERM where it has tried to lock its currency to other currencies. So it’s not clear that it would be in the interests of the rest of the United Kingdom to enter into a Euro-style currency zone with the rest of Scotland…. It’s unlikely that we could make it work. There are some very big questions as to whether the rest of the United Kingdom would want to tie itself to what would have become a foreign government, why it would want to tie itself to an economy very dependent on the price of oil and a very large financial sector. These would be questions for England, Wales and Northern Ireland."
Shetland’s claim to North Sea assets is no less logical than Salmond’s.
Note how Osborne refers to the ‘rest of Scotland,’ leaving open the option of Orkney and Shetland seceding and becoming the Dubai of the north. If you do a Salmond, and draw an imaginary line into the sea, their claim (right) would be no less logical than that of Scotland as a whole.
Anyway, today’s Treasury paper will say there is a ”need to agree a negotiated set of constraints on its economic and fiscal policies”. Here’s its case:-
“In practice this would be likely to require rigorous oversight of Scotland’s economic and fiscal plans by both the new Scottish and the continuing UK authorities. Even with constraints in place, the economic rationale for the UK to agree to enter a formal sterling union with a separate state is not clear. The recent experience of the euro area has shown that it is extremely challenging to sustain a successful formal currency union without close fiscal integration and common arrangements for the resolution of banking sector difficulties.”The Spectator writes this morning that:
"The idea of Scottish separation is, to me, such a nonsense because it creates a thousand problems and solves none. Scotland’s problems are dire economic growth, the worst poverty levels in Western Europe, appalling life expectancy etc. None of which will be resolved by having more Saltires flying over hospitals, or cutting back the military. Osborne is right to highlight the currency issue, as it’s one of many to which the nationalists really do have no convincing answer."