Tuesday, 26 November 2013

The Man Who Stares at Groats - positive currency for Scotland's Future

Salmond and the ancient Scots groat
The Scottish Government has today launched a far reaching white paper, Scotland's Future, outlining its plans for a new, independent country if Scottish voters say Yes next September. In a polished performance, as well as presenting the proposed constitutional settlement and complex division of assets and liabilities between Scotland and the remainder of the United Kingdom, First Minister Alex Salmond and his deputy, Nicola Sturgeon, outlined a range of key policy objectives should the SNP be successfully elected as the government of a newly independent country.

The SNP's plans are mildly left of centre, with economic growth at the heart of their plans for a settlement along a vaguely Scandinavian type model of mixed ownership and social welfare - an objective probably reflecting the broad political consensus within Scotland but something increasingly alien to the gradually harsher, neoliberal approach of the two and a half main parties south of the border.

Controversially, the paper includes retaining a currency union with the rest of the UK and keeping the pound sterling as Scotland's currency. This may be driven by the SNP seeking to reassure voters that independence will not create some new alien world with a return to the ancient Scottish coinage of the groat but it leaves a post-independence Scotland somewhat beholden to the economic policies of its much larger neighbour, precisely the recipe for disaster that has racked the European Union in recent years. What if, as does not seem unlikley, an independent Scottish Government wishes to follow an expansionist policy while London continues to opt for austerity? There is little doubt which piper would call the tune and Scotland's independence in economics at least would be curtailed as a result.

Independent countries are most successful if they have independent currencies - and of Scotland's Scandinavian comparators, only Denmark has yielded to the Euro. Sweden and Norway, one inside and the other outside the EU, thrive by their own currencies, while the remarkable turnaround in Iceland's economy since the disaster of 2009 would not have been possible without its sovereignty on currency (as well as a Green - Left government). A Scottish currency is a key part of the Scottish Green Party's egalitarian pro-independence platform, lauched by MSPs Patrick Harvie and Alison Johnstone a couple of weeks ago. (Q&A video with Patrick Harvie below.)

There is little doubt Scotland could function very well indeed as an independent state and given the increasing cultural and political divergence between Scotland and, in particular, the dominant "middle England", there is no compelling reason to remain in a union which few south of the border are particularly bothered about. If the unionists' call north of Gretna is Better Together, their southern equivalent, were there one, could as easily be titled Couldn't Care Less.

The narrow and mean-minded approach of the unionist camp - denouncing currency union as fantasy when they had previously endorsed it and running on a ceaseless tirade of abuse towards Alex Salmond in particular - does little to enhance its case. It lacks vision and seems bereft of any emotional connection with the debate, trading often dubiously constructed figures about fiscal changes and bizarre stories about not being able to see Dr Who on the TV, rather than addressing any positive reasons for remaining in union. Its harsh rebuttal of the white paper before it was even published will do little to help its case just as some polls seem to show the gap between the two sides narrowing slightly. If the Coalition Government and Labour unionists remain as stridently intransigent on opposing currency union, it is to be hoped the SNP does the logical thing which it should have done in the first place and moves to a separate Scottish currency as the only choice remaining given the blatant ill will of the UK parties. It would be a massive error to nail their colours to the mast on a union with entities that don't reciprocate.

In the meantime, there are over 600 pages to read, available here, and ten months of campaigning to go. For Scottish expats like myself, south of the border for some years, it will be an interesting time guaging the impact of the debate on the rest of the country - the commonly held, but rather incorrect, view being that Scotland is subsidised by the English taxpayer (Scotland actually contributes more tax per head than the rest of the UK and receives significantly less than Londoners and many parts of the north of England).

With the rightwing media portraying Scotland as a burden to the rest of the UK, this line of argument no matter how incorrect may nevertheless become more of an issue south of the border in the run up to September. In the event of a No vote, then, as the Coalition's Secretary of State for Scotland has indicated, there may well be some move to change the public funding for Scotland in the long established Barnett formula, which sets funding for Scottish services. Consequently, having voted against independence after being told it would be economically damaging, Scots may then face being economically damaged by Westminster in any case.

So, the choice may become starker still - who do people in Scotland have confidence in most : an increasingly remote, centralist Government in Westminster; or themselves?

1 comment:

  1. I do have doubts about Alex's currency plan, and of course you are right - a future in a currency unions deprives you of the levers of the economy,

    I think Alex has done well largely through being positive. The cries from the 'No' campaign sound bitter and totally negatives.

    In a battle of ideas, I hope the positive ones win.

    Sadly, it looks like the 2015 GE will be deeply personal and very negative. I hope some of Alex's positiveness rubs off (very unlikely.....)