THE timing of the Scottish referendum could “hardly be worse” for Alex Salmond and the pro-independence campaign, economists told a major conference on the debate yesterday, amid further questions over the currency deal envisaged by ministers after a “yes” vote.
The crisis in the eurozone had thrust “intensive scrutiny” on currency-sharing pacts between sovereign nations, Professor David Bell of Stirling University said at the event sponsored by The Scotsman. It had led to the conclusion that if such deals were to work, nations had to pool their spending, tax and banking decisions.
Prof Bell said: “Given that the forces of economic convergence are probably at a zenith in Europe, the timing of the Scottish referendum could hardly be worse for those promoting independence.” He added: “The viability of currency unions is under the most intensive scrutiny and the conclusions suggest that other structures such as fiscal and banking unions need to be in place if currency unions are to survive.”
Deputy First Minister Nicola Sturgeon insisted that a currency deal would keep the UK-wide single market while allowing Scotland to spend and tax as it saw fit.
She rejected calls for a fallback position if the rest of the UK refuses requests from an independent Scotland to be part of a formal sterlingzone and said she does not back a new currency.
Alastair Darling, leader of the Better Together campaign, said an independent Scotland would be placed in a “strait-jacket” by Westminster under a deal.
The key independence debate formed a centrepiece of the conference at the National Galleries yesterday, the latest in a series organised by The Scotsman.
The SNP plans to have a formal deal with the rest of the UK after independence under which the pound would remain the currency and the Bank of England would continue to set monetary policy.
Chancellor of the Exchequer George Osborne has claimed such a deal is “unlikely” because it would expose the UK taxpayer to risks over which it would have no control.
Economists speaking at the conference said yesterday that such a plan was “viable”.
They said the problem would be finding an enforceable set of rules that sovereign countries would abide by even in the tough times – as illustrated by the eurozone crisis, which saw countries break the rules on spending and borrowing.
Prof Bell said that “designing enforceable fiscal contracts has proved well-nigh impossible thus far”.
Dr Angus Armstrong, of the National Council of Economic Social Research, added: “There are certainly good reasons for why two countries would want the same currency… but economic instability would be more likely to spill over onto the other side. An agreement to minimise the spill over would be extremely difficult to enforce.”
Mr Darling picked up on those difficulties in his own speech to the conference. “I’m very clear that if you go into a currency union two things need to happen. One is that the other side has to agree. Whether you like it or not, you cannot guarantee that. Any deal would come with terms and conditions,” he said.
“The problem that Nicola [Sturgeon] will have is that whatever those terms and conditions are, if you won’t look at any other option you’re stuck with whatever the other side is prepared to offer. That just seems to put yourself in a very weak negotiating position.
“I’m not going along saying it won’t work. What I’m saying is you’re moving to a situation which is deeply unfavourable to Scotland. We’re putting ourselves in a straight-jacket.”
Ms Sturgeon said that it would be “incredible” for the UK to reject a currency union.
She said: “The extent of our trade, our integrated financial services market and the contribution that oil and gas and other Scottish exports make to the UK’s balance of payments all demonstrate that it will be in the interests of Scotland and the UK to share the pound.”
In a Q&A afterwards, she added: “Is Alistair seriously arguing that a UK government is going to turn around to its own businesses and say, ‘we’ve got your second biggest trading partner that wants to stay in a currency union and we’re going to say no to that’. It is incredible.”
THE campaign to keep Scotland in the UK will today appeal to the 800,000 Scots in England, Wales and Northern Ireland to make their voices heard in the debate ahead of next year’s independence referendum.
The launch of Better Together London will see the campaign trying to galvanise support from outside Scotland to underline the way Scots have integrated with the rest of the UK in the last 300 years.
London is home to thousands of Scots who will not have a vote in next year’s referendum, but Better Together believes they can still contribute.
Former chancellor and chairman of Better Together Alistair Darling will be joined at the event by Tory peer Lord Strathclyde and Lib Dem Chief Treasury Secretary Danny Alexander.
Soul singer Barry White quoted in a referendum debate first
RUPERT Soames scored a first in the Scottish constitutional debate yesterday by becoming the first influential figure to quote a 1970s soul sensation to back up his argument.
“As a former DJ,” said Mr Soames, giving an unexpected insight into a past life as he extolled the virtues of remaining within the UK. “I have to quote the late great Barry White and say ‘we love you just the way that you are’.”
It was not just the chief executive of Aggreko (turnover £1.5 billion) who gave us a glimpse into his youth. Jim McColl, chief executive of Clyde Blowers (turnover £1.4 billion) told us that his move to Monaco could be traced to a boyhood love of motor-racing. He’d gone to Monaco to see the cars. Then aspired to live there.
This came up in one of the more heated exchanges when Mr McColl was asked about his tax arrangements. He was resident in Monaco for tax purposes, he confirmed.
But anger over Mr McColl’s place of residence was nothing in comparison to the environmental disaster that Mr Soames predicted should Scotland go independent. In a diatribe against extra red tape, he warned: “Those great forests of Scotland, be ye afraid. Imagine the paperwork.
“Be ye afraid because the great forests of Scotland will be pulped to produce the invoices and credit notes and balance sheets. Rejoice you herds of accountants, consultants and lawyers at the hours of work that are going to be required to install and manage orders.”
From DJ to Old Testament prophet, all in a day’s work for Soames.