Keeping the pound would be ‘ludicrous’, says Darling
Alistair Darling: Scotland would be able to control interest rates. Picture: Getty
FORMER chancellor Alistair Darling has dismissed suggestions from Alex Salmond that an independent Scotland could retain the pound as an “absolutely ludicrous position”.
Mr Darling issued a stark warning that Scotland would have no “control” over its own currency if under independence the country was allowed to retain sterling.
The former chancellor, who has resisted calls to lead the anti-independence campaign, said Scots would be taking a “massive risk” with their economic future if they backed the SNP’s flagship plans for a split with the UK.
Mr Darling warned that the “downsides are immense” with independence and said that Scotland will be plunged into unparalleled economic uncertainty if voters back SNP plans to split from the rest of the UK.
His intervention came as Mr Salmond insisted that “sterling is not owned” by Conservative Chancellor George Osborne, who had refused to say whether an independent Scotland would be allowed to keep the pound.
Scottish Secretary Michael Moore yesterday said that there would not be a “legal problem” with an independent Scotland retaining the pound, but claimed that the move would mean “less influence” over setting interest rates.
He said: “If that is part of the deal that the independence section of the debate wanted – I don’t think there’s a legal problem with that. But you do have to very quickly think about the consequences of who would set interest rates, about what it would mean for your spending plans and your borrowing plans, and routinely when I’ve heard senior nationalists, including the First Minister, asked about this point, they don’t actually get on to that.
“What would be the point in setting yourself up as a foreign country with less influence over that interest rate setting policy than you do at the present time when you’re part of that country.”
The First Minister said that the pound would be a “fully convertible currency” in an independent Scotland. Mr Salmond added: “The UK government can’t stop an independent Scotland using sterling for a number of reasons. One, sterling is not owned by George Osborne. He has been Chancellor for 18 months – sterling has been around for a long time. Bank of England was actually founded by a Scot before the Act of Union as it happens.
“Sterling is a fully convertible currency. You can’t possibly instruct people not to use sterling. I don’t know what George Osborne’s degree was in, but it certainly wasn’t in economics.”
Mr Darling heavily criticised the SNP’s support for an independent Scotland retaining sterling, which he compared to the Central American nation of Panama using the US dollar for its currency.
He said: “Panama uses the dollar, which is obviously the American currency. The difficulty is, though, if Scotland was using the pound in the same circumstances, its interest rates would be fixed by the governor of a bank in what would then be a foreign country.
“It seems to me to be an absolutely ludicrous position to get yourself into, where you have a currency and you don’t actually control monetary policy. Or you could join the euro which I think Alex Salmond knows is as toxic in Scotland as it is in the rest of the United Kingdom.”
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Comments
There are 87 comments to this article
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J Gordon
Tuesday, January 24, 2012 at 05:14 PMto Bradged - thanks for the clarification. Nonetheless, it does not stand that it is ludicrous for independent Scotland to retain Sterling. It is just one other thing to be agreed.
Anagach
Monday, January 16, 2012 at 11:34 PM72 Jimmy Z. Why might she be denied a vote when in almost every sense she is far more a 'person of Scotland' than say an English person working here at the time of the referendum who would get a vote? ---------------------------------------------------------------------------------------------------- Votes are based upon the voters register. Because of mobility and also economic migration that means a lot of people are voting away from their "homeland". Can she not register to vote from your address and de-register where she currently works.
Charles P
Monday, January 16, 2012 at 08:25 PMMr. Darling and his Labour colleagues presided over the financial collapse of the United Kingdom and left us to be Governed by a Coalition of Public School Millionaires. He is an utter failure, and like his Scottish Labour colleagues at Westminster is only interested in maintaining his cushy sinecure. The ones left up in Scotland because they are not up to snuff and would not survive down South, are pathetic and have finally been rumbled by the Scots. Anti Scottish just barely covers them! A sorry lot indeed!
bassbhoy
Monday, January 16, 2012 at 06:43 PMTo SAGAMO Yes, there are certain similarities. sovereginty association, cultural parallels, and currency. Agreed. However, would you not conceed that the Government of Quebec has considerably more powers over the provinces affairs than the Scottish executive has over Scotlands? The Federal Government in Canada has bent over backwards to keep Quebec happy in Confederation. They have control over language, culture, resources,media, and economic planning. they have a provincial tax base (as do all provinces). 24 senators in the upper house as opposed to 6 from each western province (regardless of population). They recieve massive equalization payments from the rest of the country.( it has been proven that Scotland does not). And Quebec has controlled the agenda of the federal government for as long as i have lived. I would take that deal for Scotland, its similar to Devo Max, but of course thats not on the table is it? My personal experience draws more similarities with Alberta. where Peter Lougheed had to fight tooth and nail against Trudeau for control of the natural resources of the Province. If Trudeau had won that battle then Alberta would have stayed a poor farming Province instead of the powerhouse of the Canadian economy. All the profits from Albertas oil wealth would have gone to central Canada. I have not read the article you posted yet but i am an avid reader of the globe so i will check it out when i have time. Scotland has been mismanaged by Westminster, its potential has been wasted. For years Scottish politicians have ridden the gravy train while the countries best and brightest have had to emigrate because of lack of opportunity. No one has been standing in Scotlands corner the way lougheed stood up for Alberta. Not until Alex Salmond. your thoughts?
McCanada
Monday, January 16, 2012 at 05:42 PMThe resemblance between what happened during Quebec's attempt to gain independence from Canada and what is happening in Scotland now are spooky. The currency question is just one example. Doug Saunders of Canada's Globe And Mail newspaper delineated the parallels in his Jan. 14, 2012, column "Scotland creeps toward a Quebec-style constitutional crises. Saunders column can be found here: http:www.theglobeandmail.comnewsworlddoug-saundersscotland-creeps-toward-a-quebec-style-constitutional-crisisarticle2302154 Scottish readers might not be acquainted with the Canadian politicians to whom Saunders refers in his column and many might well take exception to the "harsh realities" about Scotland he describes. Nevertheless, I'm sure Scots will find the extent to which the dynamics of the two independence movements resemble each other interesting. Scottish nationalists will no doubt hope the resemblance won't extend to their movement losing the same considerable amount of steam its counterpart in Quebec has.
bassbhoy
Monday, January 16, 2012 at 05:41 PMI am stunned by the propaganda being distributed from Westminster in the past few weeks. This Government seems to be completely clueless as to how to deal with Mr Salmond and his surprisingly effective ministers. I have been watching as a deluge of anti Scottish rhetoric has spewed forth from the bowels of the mainstream media as they drag out anyone who they think has credibility to tell the Scottish people of the devastation to come. 1. The interest rate policies of the United Kingdom have NEVER taken into account the needs of the Scottish economy.The Bank of ENGLANDS rates have always been dictated by the business interests of the south east of England. So, if the Scottish Government decides to keep Sterling ,(which we are a fully integrated member of) it would be similar to what the Scottish economy has had to deal with for 300 years. 2. The United kingdom Government, BBC, and Military Intelligence have been found guilty of deception in regard to the economic wealth of Scotland by hiding information about North Sea oil, This Government does not represent you, it regards Scotland as an irritating problem that they have to deal with now that the SNP have a majority. Nothing they say can be regarded as having any credence. And considering what a bunch of subsidy junkies the Scottish people are ,Cameron and company sure are pulling out all the stops to keep Scotland in the Union. 3. People should stop using Quebec as an example or equating the experience there with what is happening in Scotland. Quebec as a Province of Canada has far more powers that the Scottish Executive Including complete control over natural resources. If Salmond can pull this off it will be a bloody miracle considering the forces arrayed against the SNP. Westminster is trying to scare people by predicting worst case scenarios while witholding vital information about the true potential of the Scottish economy. Westminster does not represent the people of Scotland. It handles them.
The Tin Man
Monday, January 16, 2012 at 04:31 PMThis isn't really the His Alexness' strongest plank of policy. Witness His retorts.
Judith
Monday, January 16, 2012 at 04:27 PMThe aim of the World Order Government is to have six or seven unions with one currency. Britain is part of the EU yet kept their own currency. I'm confused as to their real aims. Aren't many countries including Scotland saying...we want our own so we can decide on our future? The WOG is a failure since the world is worse than ever with poverty and wars? The elite few are the only ones doing well. it's like the royals are back. Think outside the box.
Bradged
Monday, January 16, 2012 at 04:17 PMSurely the key point in Darling's commentary is that the Euro Zone are going through huge political problems around whether a currency union (ie different than a pegged currency) can survive without a political union. These basic questions would also apply to Scotland if we chose to keep sterling. We need to know what the views of the political parties would be if the UK declined to continue a currency union. Would Scotland then float its own currency (perfectly do-able but the debate would shift to what currency speculators would do), peg to sterling (with no influence on interest rates or money supply), join the Euro (will it still exist?), or peg to the Euro (same as sterling re interest rates and money supply). Platitudes from the SNP that all would be well, or from opposition parties that Scotland would automatically go to hell in a hand cart, are no use. We need, as a people, to better understand the issues, and to base our responses on that new found knowledge.
korky
Monday, January 16, 2012 at 03:46 PMEven although he was the best of a bad lot no one should consider this man's opinions as expert. Totally ineffective in his role in that government.
Ron Greer
Monday, January 16, 2012 at 02:43 PM74 Money is only the means of exchange. Personally I would use the skulls of politicians, even though the contents are valueless.
Ron Greer
Monday, January 16, 2012 at 02:40 PM68 We are having a debate so that we can be better informed in our decisions.
Ron Greer
Monday, January 16, 2012 at 02:39 PM73 How long would you suggest we wait Yok--a 1000days?
Yok Finney
Monday, January 16, 2012 at 02:38 PMI quote from the late Dr Edward C Hamlyn: In a recent personal letter written on behalf of Eddie George, Governor of the Bank of England, it says "The trouble with money is, that money is not really money." You cannot get more confused about money than that, can you. In another personal letter from a Shadow Chancellor [sic!], he refers to "national sentiment concerning monetary money." Where does sentiment fit into the balance sheet and what sort of money is monetary money? It can all get very confusing. There is no need to imagine that Cabinet Ministers and Governors of the Bank of England are being dishonest about money, they don't need to be. Their intellect is so befuddled by emotional confusion over money that they have lost the ability to think straight on the subject. And of course so have you, and you will find that your emotions about money will make this subject difficult.
Yok Finney
Monday, January 16, 2012 at 02:26 PMThere needs be a reasoned debate on the merits of Sterling! Both from a historical and very present perspective. Was it a big player in causing two world wars for example? How does the UK citizen benefit, if at all. Governors of the Bank of England have been quite brazen about the amazing sleight of hand of creating money out of nothing. How does trading currencies benefit folk in the slightest?___ What are the advantages of a Nation creating and regulating its own currency and spending it into circulations instead of indebting itself to the banksters. This has never been tried in the UK?___ None of the Unionists parties have paid the slightest heed to the pleas from the British Association for Monetary Reform.___ It's over early to call a referendum!
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