WHEN the governor of the Bank of England yesterday announced that he was preparing currency contingency plans in advance of next month’s independence referendum, each side in the debate claimed this development supported their argument.
The governor took pains to stress that the bank has no locus in the ever more fraught debate over whether an independent Scotland could or should enter into a currency union with the rest of the UK.
Rather, and quite reassuringly, Mr Carney said the bank’s concern was to act in the best interests of the financial stability of all of the United Kingdom, now and in the months after 18 September.
Whether there was a currency union or not, he said, was entirely a matter for politicians. And whatever they decided, the bank would act accordingly.
But his comments raised the prospect of a dangerous period after a Yes vote when the future of the pound could be seen to be uncertain. The Governor of the Bank of England’s responsibilities include providing information which will reassure those within the UK financial system and those working the markets. Yesterday, he began to do that, and his comments are to be welcomed.
The last thing anyone needs is a period of UK financial instability after a Yes vote, with market concerns about the future political and economic governance of the pound. And yet, in the current political climate, this looks to be a very real risk.
Mr Carney’s comments will be used to up the ante in the final weeks of the campaign, in a way that is likely to increase jitters in the finance markets.
For the SNP, Finance Secretary John Swinney claimed Mr Carney’s remarks bolstered the SNP’s case that an independent Scotland will be part of a formal Sterling-zone arrangement with England, Wales and Northern Ireland.
Mr Swinney’s insistence that this will be the case flies in the face of the long-held position of unionist parties that there will be no such agreement.
The head of the pro-UK Better Together campaign, Alistair Darling, said Mr Carney had confirmed that the Bank of England would implement whatever currency arrangement it was asked to by UK politicians.
The No camp repeated its calls for Mr Salmond to “come clean” about his Plan B, if a currency union is not possible. Mr Carney’s contingency plans are said to focus not only on uncertainty over currency but on the risk of “deposit flight” from Scottish banks.
There has been little compunction on either side of this debate about using risks to financial stability that may follow the vote on 18 September to further their causes. But this issue is too important to be bandied around like just another debating point.
All the politicians in this campaign must realise that their political strategies may have serious financial consequences.
Blurred lines on rescue mission
Prime Minister David Cameron’s announcement yesterday that Britain will be involved in an international mission to rescue stranded Yazidi refugees in Iraq is very much to be welcomed.
So far, our armed forces’ actions have involved dropping food parcels and water purification kits to those fleeing Islamic State militia. But involvement in a large-scale rescue mission is a significant step forward.
Mr Cameron is at pains to point out that this is a humanitarian rather than a military mission. But the line between aid and intervention is beginning to blur. The risks of our air crews – and troops, should they be necessary – coming under attack by jihadists must be considered real.
While we would expect politicians from across the spectrum to support the rescue of innocents, the Prime Minister must not take too much for granted as Britain becomes further involved.
We deserve to know exactly what Britain is getting into, and our politicians must be given the chance to speak up.
Days ago, Britain was going no further than providing airdrops of food and water. Now, our involvement is markedly more dangerous.
Mr Cameron’s plan to involve British forces in this rescue mission is morally just. But as this newspaper said yesterday, the risk of mission creep is ever-present, and now even more of a possibility than before. The rules of engagement in this war zone are still vague. And there remains a risk that circumstances could draw the UK into combat.
Mr Cameron has so far resisted demands to recall parliament to discuss this crisis. As Britain gets further involved, that position appears increasingly untenable.