Tuesday, 23 April 2013 INDEX

Scotland & the euro
In Scotland they say Tories are probably scarcer than wild haggises roaming round the highlands. So when the Tories give advice to the Scots, it might be a good time to wonder exactly why they are doing it.

The British Government (essentially the Tory Party) has warned that Scotland might not be allowed to continue to use the pound if it ceased to be part of the United Kingdom.

This seems far fetched to anyone who has been to, say Gibraltar, where British currency continues to be used quite successfully without the place being in any way, shape or form part of the United Kingdom.

One also wonders exactly what the British Government could do to stop the Scots using the pound? Could they impound (a particularly apt term) currency from anyone who attempted to cross the border to an independent Scotland? Probably not, though it is not so long since this was done more or less routinely to people seeking to spend their money abroad.

But these days, if Scotland really wanted to use the pound it would be quite hard to stop them, particularly since there would be quite a few pounds kicking about in cash registers and bank accounts at the time of independence.

The reality, of course, is a lot more subtle than this crass scenario envisages. The truth is that the Tories realise (what the Labour Party in its timorousness has missed) that with UKIP, the Conservatives have become more or less unelectable. In fact the only chance that they could ever get back to power under any circumstances is if Scotland stopped sending Labour MPs to Westminster. And this, of course, is what would happen if they voted for independence.

The one great achievement of the last Labour Government (apart from keeping us out of the euro, which since it is a negative can not really be considered an achievement) was the massive devaluation after the great crash in 2007/8.

The pound currently trades at a very attractive rate (from the perspective of exporters) and its value must be regarded as one of the contributing factors to Greek, Spanish, Italian and even Cypriot distress in recent years.

A Scotland that was an oil producer with a very low entry rate into the euro would certainly get a flying start from an economic point of view. And the earlier scare story (that Scotland would have to re-negotiate its membership of the European Union) would certainly be less significant, since the euro is in such a mess that any country willing to join it would be a shoe in for EU membership. Probably even Turkey!!!!

So in just a few years we could have an independent Scotland using the euro. Would it make a huge difference? Probably not.

Would the Scots benefit? Who knows! Basing an economy on the oil industry is highly risky, since even the largest and most sophisticated countries find it extremely difficult to control those companies. The oil industry usually ends up controlling them.

But it might enable the Tories to have a more or less permanent majority in England. For those who love freedom, pluralism and the welfare state that might prove to be a bitter blow.

Posted by Jonathan Brind at 16:08
Tuesday, 23 April 2013 INDEX