Michael Kelly: Scottish independence would be in name only
Picture: Julie Bull/The Scotsman
Going it alone will not change the fact that many major decisions about Scotland are made south of the Border
YOU can fool some of the people all of the time. And it is clearly on these electors that Alex Salmond is focusing. As the unionist arguments for avoiding divorce get stronger, the First Minister continues with his double-speak, claiming that break-up can be not only easy but painless, even rewarding, for both parties. But his arguments do not stand up to economic analysis.
According to economist Brian Ashcroft in his blog Scottish Economy Watch: “The First Minister’s recent pronouncements on monetary and exchange rate policy post-independence give the impression of being made up on the hoof.” If the government ever produces its thinking on these matters, all sorts of uncomfortable anomalies and obstacles will emerge.
One potential problem currently doing the rounds in Edinburgh’s inner circles is the threat posed to English-based depositors with Scottish banks and the users of Scottish pension funds. Current bank guarantee schemes only cover the funds of those based in the country in which the bank is based. It would be intolerable for the Bank of England to agree to be the lender of last resort for Scotland, as the SNP suggests, without safeguarding the funds of its own nationals. It might be possible in the short term to cobble together some sort of mechanism to deal with this. But the obvious solution is for the Scottish banks to move to England. What remains of the UK would be anxious to welcome them – especially as RBS owes the British government £45 billion in bail-out money, for which the SNP is refusing to take any responsibility.
But this is just one detail of allowing an independent Scotland using sterling to be backed by the Bank of England. Mr Ashcroft examines whether or not it would be feasible for the Bank of England to become the Bank of Sterling, allowing it to have a relationship with a Scottish bank – though not the Scottish state – similar to the one between the ECB and the eurozone.
He accepts such an arrangement could work. But he dismisses it because “it would mean that rUK (the remainder of the UK) would effectively be borrowing in a ‘foreign’ currency while the Bank of Scotland (if it could be called BoS), not the rUK, would be issuing the currency”. The risk of default would be higher, and so the new United Kingdom would have to pay to borrow. Mr Ashcroft concludes that “this is not going to happen” and, instead, the Bank of England would charge Scotland “penal” rates for borrowing and demand fiscal rules which would restrict the freedom of the Scottish Government on monetary and fiscal policy. It is economic independence in name only.
Richard Leonard of the GMB trade union comes at this problem of the intractable relationship between the economies north and south of the Border from another perspective. He pointed out this week that Scotland exports and imports almost twice as much to and from the rest of the UK as from and to the whole of the rest of the world. He joins this with Scottish Government figures showing that more than 80 per cent of large enterprises in Scotland are owned outwith Scotland. They account for 63.9 per cent of employment and 77.5 per cent of turnover. This leads him to join the growing number who have concluded that “the commanding heights of the Scottish economy are externally owned and controlled”.
More specifically, he points out that the ten biggest private-sector employers of GMB members in Scotland are all either UK-owned and controlled, quoted on the London Stock Exchange or highly dependent on the whole UK market.
So experts are arriving at the same conclusion: that political independence will not alter the fact that strategic political, economic and corporate decisions will still be taken in London. Independence means giving up a direct vote on the fiscal and monetary policy of Scotland’s largest market. It is possible. But, Leonard asks, “Does it make sense?”
This is the kind of hard-headed and objective analysis that is increasingly going to undermine the independence myth. Since David Cameron rightly opened this debate, we have seen the SNP twist and turn on all the questions posed to them. It emerged at the weekend that now we can continue to be part of a United Kingdom yet still be an independent state!
The Nationalists are unprepared for these debates. Independence to them is an act of faith. They have no need to explain it or defend it among themselves. But they are outraged when those not of their religious persuasion challenge the very basis of their belief.
This is why – in true Orwellian fashion – they can, on any issue, hold two contradictory ideas at once. The latest example is how England’s attitude to any post-referendum negotiation is being talked up. For decades the SNP has portrayed the English as exploiters out to do Scotland down by stealing our oil, refusing our banknotes and only calling Jim Clark/Sandy Lyle/Andy Murray Scottish when they lose. Now, after all this vitriol, Alex Salmond has decided to paint the future relationship with the south as friendly. In the negotiations on separation, the English will be warm. Fairly and reasonably, England will give Scotland all it needs to launch it on its way to Utopia.
My experience of politicians is that if they have been roughed up – as the English ones will have been during a successful Yes campaign – there will be only one thought in their minds: to ensure that a breakaway Scotland finds it as difficult as possible to prosper. They will yield nothing and try to ensure that terms for independence penalise Scotland as much as possible.
And will the Foreign Office, the Treasury and the Bank of England not make life as difficult as possible for the new wee state? Alex Salmond may well be right when he claims England will be better off after it has got rid of Scotland. But don’t be kidded on. If it is, we’ll be the ones who’ll pay.
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Comments
There are 57 comments to this article
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RobertDavidKnight
Sunday, February 5, 2012 at 08:13 PMIs this the same Professor Brian Ashcroft who is married to Wendy 'Bring It On' Alexander?
Ron Greer
Saturday, February 4, 2012 at 10:58 AM18 Tennis C Williams Another brilliant piece of pro-independence satire, but wasted on #42 whose operation for the poker up the Khyber Pass has obviously been a Major Disaster.
Ron Greer
Saturday, February 4, 2012 at 10:52 AM53 It was Labour unionists who did the deal re the offshore resources---you are right. Winnie Ewing once said that all the real enemies of Scotland were north of the border---she was right too.
Ron Greer
Saturday, February 4, 2012 at 10:49 AM46 They have already started. That's what the Orkney-Shetland opt out is all about and the hijacking of the seabed off Berwick.
neoloon
Saturday, February 4, 2012 at 10:27 AMIt's disgusting to see so many Scottish unionist politicians falling over themselves in the rush to do Westminster's dirty work.
Enigma
Friday, February 3, 2012 at 03:07 PM46 `There is no doubt they (the English) would invade Scotland if the United Nations stood back and let them`. I take it you are writing with tongue firmly in cheek, Redcoats massing on the Border? Might make a good film vehicle for Mel Gibson but offensive action wouldn`t go beyond giving Scotland a good drubbing in the Calcutta Cup!
Kennedy Clan
Friday, February 3, 2012 at 09:36 AMThis is what Michael Kelly says of Richard Leonard's comments "This is the kind of hard-headed and objective analysis that is increasingly going to undermine the independence myth. " This is what Labour Candidate Richard Leonard said on being selected to stand for Carrick, Cumnock and Doon Valley in 2011; a seat he lost to the SNP "We need to inspire hope in place of fear." His positive message didn't last long did it? Similar illustrations of trading links could be generated for almost any two adjacent economies (with the possible exception of North and South Korea). Despite that fact, the number of independent countries in the world continues to grow - about 50 in 1945 to 200 today. Kelly reveals an interesting psychology when he credits Tory PM David Cameron with opening the debate and not the overwhelming vote of the people of Scotland in 2011. Stockholm syndrome kicked in Michael?
gus1940
Friday, February 3, 2012 at 09:01 AMHow many biased blatant pieces of political propaganda can be packed into this bogroll before it ceases to be a newspaper and becomes just a political tract. Of course, many people will consider that it ceased to be a newspaper several years ago.
brianwci
Friday, February 3, 2012 at 12:13 AMMichael Kelly still in La La land I see. Michael, wishful thinking is not the best grounds for political attack. there has to be a strong element of truth even in fantasy politics for it to make a difference. Clearly Michael is only in it for the money. Instructions run along the lines of, disnae matter whit pash ye write Michael as long as it's anti SNP and runs tae aboot 750 words. Yer tenner is already in the post son, gone yersel. VOTE YES.
Simonsaid
Thursday, February 2, 2012 at 08:32 PM35Anagach---------- Why yes I always give in to threats of violence. ==================================================COWARD
samcoldstream
Thursday, February 2, 2012 at 07:50 PMThe author is more than well aware that between 1922 and 1937 Irish Independence was also in name only. The new Irish Free State and its government which, to become independent, had to agree to become a British Dominion, and its members take an Oath of Allegiance to George V, Edward Vlll (Briefly) and George Vl. It was also dependent on the Sterling area until 1970. In 1949, Ireland declared itself a republic.
cutommy
Thursday, February 2, 2012 at 07:30 PMUnfortunately, I believe Michael Kelly is right, "My experience of politicians is that if they have been roughed up – as the English ones will have been during a successful Yes campaign – there will be only one thought in their minds: to ensure that a breakaway Scotland finds it as difficult as possible to prosper. They will yield nothing and try to ensure that terms for independence penalise Scotland as much as possible. And will the Foreign Office, the Treasury and the Bank of England not make life as difficult as possible for the new wee state? Alex Salmond may well be right when he claims England will be better off after it has got rid of Scotland. But don’t be kidded on. If it is, we’ll be the ones who’ll pay." There is no doubt they would invade Scotland if the United Nations stood back and let them. Scots must prepare themselves for a difficult period after independence. If the threats continue to mount, Joining the Euro may prove to be a better option.
Tiny
Thursday, February 2, 2012 at 07:29 PMBuford Von Stomm must be delighted with the results of the latest poll with the SNP put into a corner with only 49 per cent of the vote while the Labour Party can bask in the glory of holding onto 23 per cent. Enthusiasm for the new Labour Leader will no doubt kick in soon and will probably keep Labour in double figures with the Conservatives not overtaking them until after May. Can you see it? Labour ( Tories Mark two) nine per cent Real Tories ten per cent Send for Ed!
Sadie of Dollar
Thursday, February 2, 2012 at 07:26 PM29-30 Mordor - thankyou for enlightening us about Ashcrofts political persausion and family ties-----------------------------The editors of the Scotsman should do better in disclosing these kind of links rather than hoodwinking us into thinking that they are independent commentators. A high standard of journalism is required in these days when propaganda in the media is a distinct possibility.
zippitydoodaa
Thursday, February 2, 2012 at 07:16 PMIt's absolutely amazing that Scotland , out of all the small countries in the world, is completely incapable of being an independent country................... Instead of feeling downhearted about this, we should celebrate this uniqueness, maybe by using it a tourist attraction -"Come to Scotland!, Home of the most inept and useless people on earth!!'......................................................... Thank goodness there is people like Kelly brave enough to point out these uncomfortable, but real, truths..........................................................I for one will be voting NO, now that I'm aware of how utterly incompetent and feckless the Scots really are.
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