DCSIMG

Brian Wilson: Currency debate almost laughable

The pound, the euro, and numerous other options have been floated during the independence debate. Picture: Reuters

The pound, the euro, and numerous other options have been floated during the independence debate. Picture: Reuters

  • by BRIAN WILSON
 

IF it wasn’t so serious, the SNP’s divisions over what currency we should adopt would be laughable, writes Brian Wilson

It did seem a bit odd that the SNP should commission its polling – which produced such curious results – from a subsidiary of Dipsticks Research Ltd based in Hexham, Northumberland. I suppose anyone closer to home might have caught on quicker to the reputational risk.

Anyway, the Panelbase division of Dipsticks, when it is not dipping into the unfamiliar world of political chicanery, offers “rewards” to self-appointed panel members who assist in consumer surveys. Ever anxious to assist, might I suggest a new task for Dipsticks – it could help its Edinburgh clients to Pick-A-Currency.

Should we float our groat, stick with somebody else’s sterling or take a punt on the euro? A few short years ago, Alex was in no doubt that it was definitely going to be the euro. Now, good old British sterling, sound as a pound, is back in Nationalist favour. But the groat is making a strong run on the rails. Let’s ask the panel! There’s as much chance of getting a sensible answer.

If it wasn’t so serious and if millions of jobs and pensions were not involved, this would be comical. But they are. And hordes of civil servants are being forced to waste their time on composing a white paper on independence while the legs are being kicked away from its central tenets before the tome even sees the light of day.

Having belatedly placed his bets on sterling, Salmond will now have to go and argue that case – however disingenuously. He can scarcely change his mind again. Yet the attacks which have already been mounted – not least from his own side – mean that whatever verbiage the white paper comes up with, it will be no more than one opinion among many, incapable of offering assurances on such a crucial matter.

The latest to join the fray are the economists Jim and Margaret Cuthbert, whose work has regularly been paraded in the past by the Nationalists. Aligning themselves this week with Salmond’s predecessor, Gordon Wilson, they concluded that “ceding control over monetary policy” would result in it being “delivered primarily in the interests of the south-east of England”.

Now, let me get this right. The whole complaint of Scottish Nationalism is that “London control” does not take account of Scotland’s needs. Whatever the merits of that argument, it seems unlikely to be addressed by turning our alleged persecutors into a foreign state while leaving them with “control over monetary policy … delivered primarily in the interests of the south-east England”. And that is the prognosis coming from Salmond’s own side.

In similar vein, Jim Sillars warned: “Small Scotland in a currency zone with large England would leave only one final master and you would not find him in Bute House. Before this hole in the independence case gets bigger, someone in the SNP parliamentary ranks will have to tell the First Minister to think again.” No chance of that, but others are queuing up.

Indeed, with such irreconcilable views within the Nationalists’ own ranks, how can anyone have confidence in what the white paper will assert when it is driven by political necessity, irrespective of intellect or evidence? It is not Alistair Darling or David Cameron that Alex Salmond should be debating with, but Jim Sillars and Gordon Wilson, since the whole credibility of his case rests on the resolution of such fundamental questions. They need to sort our their internal dispute.

The most powerful analysis of the subject came recently from the rigorous intellect of Professor Brian Quinn, a Scot who was formerly a highly-respected figure at the top of the Bank of England. His paper for the David Hume Institute should be placed on a very short list of required reading for the whole referendum debate as it goes through the argument like a knife through cheese. Retaining sterling as Scotland’s currency “but with no role in the formation of domestic or external monetary policy” would put us in the small, select company of Panama and Montengro, which have adopted the US dollar and the euro, respectively. Quinn continues: “It would be a strange form of independence for Scotland to have its interest rates determined in London, relinquishing the levers that are necessary to effect the changes in policy which the Scottish Government asserts are necessary to develop its economy in a different way.”

But – the white paper will doubtless claim (without a word of substantiation from anyone else) – Scotland will demand representation in the inner sanctums of Bank of England decision-making since it’s our pound, too. Quinn pre-empts that one in clinical terms by pointing out that, even if this happened, the Scottish representation would be a small minority – by that time representing the interests of a different state from the majority.

Neither should we forget the euro option, which is the one we would end up with if the European Union decided to stick with its own rules rather than, as airily assumed, acceded to every opt-out demanded by Edinburgh. Again, Quinn is clear on that point, backed up by recent precedent: “If the decision should go against Scotland’s claim to automatic entry to the EU and it had to apply as a new member, it would be legally obliged to commit to joining the eurozone as a condition of membership. This was confirmed recently with the admission of Croatia to the EU.”

So, it’s over to Dipsticks, since nobody else has much of a clue. One branch of Nationalism says the groat and the other says sterling. But if the president of the EU is right about us not having automatic right to entry, then it’s the euro whether we like it or not. The other alternative, of course, would be to leave relatively well alone and stay within the most successful monetary union in history, otherwise known as the United Kingdom.

To those for whom independence is all about symbolism and status, none of these arguments matter. But for the great majority, who have an interest in the economic well-being of the country and the pillars on which it depends, as well as their own security, this is serious stuff. It is maybe time for the Scottish financial sector to speak up on its own account rather than leaving it to others.

Ninety per cent of their business is outside Scotland but in the rest of what, at present, is the United Kingdom with shared currency, governance and regulation.

This is no mere academic debate and instead of wasting so much time on the hypothetical, maybe Scotland’s political leaders should pay more attention to safeguarding what actually exists.

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