Scottish independence: Scotland must go into euro, expert claims
AN independent Scotland would have “no choice” other than to join the euro, according to one of the world’s foremost experts in economic competitiveness.
Professor Stephane Garelli, a former managing director of the World Economic Forum and the director of the World Competitiveness Centre, yesterday told The Scotsman he believed that it made economic sense for Scotland to join the beleaguered currency after independence.
The euro’s position as the second-largest currency held in foreign reserves meant that it would make sense for an independent Scotland to join the single currency instead of remaining within sterling, Professor Garelli argued.
The fact that more commodity trading, including oil, is done using the euro than the pound was also cited by the professor as a reason for Scotland to go into the single currency.
The view expressed by the distinguished economic thinker contrasts with that held by the SNP finance secretary, John Swinney. He recently shifted his position on the single currency, saying that an independent Scotland would keep the pound for the foreseeable future.
In the past, the Nationalists have favoured joining the euro, but the Scottish Government’s stance is now that it cannot foresee the circumstances that would see ministers calling a referendum on joining the single currency – pushing the issue into the mid-2020s.
Yesterday, however, Prof Garelli took issue with that position, suggesting that the options for Scotland were to go independent and join the euro or stay in the Union and remain in sterling.
When asked what would be the best currency for an independent Scotland, Prof Garelli said: “You have to go into the euro. There is no choice.
“I tell you why . . . because if you look worldwide today 67 per cent of the foreign currency reserves are in dollars, 24 per cent are in euro and all the rest is marginal. So even the pound is marginal.
“So for me, if you really want to do something, whether you stay with the pound or if you really want to be independent, you go into the euro.”
Prof Garelli acknowledged that such a move would be very difficult politically given the economic upheaval experienced across the eurozone.
“Maybe, politically, people will start to scream on that and say it is too much of a change, but economically it makes a lot of sense,” he said.
Prof Garelli suggested that making money out of North Sea oil would be better served by being in the euro.
“Don’t forget, a lot of the commodity trading is done in the euro and the dollar. If you succeed as an independent country in securing the right of exploitation on commodities better make it in a [big] currency. This is why the Gulf countries are pegged to the dollar.”
Prof Garelli was speaking before he addressed delegates on the topic of global competitiveness at the Scottish Council for Development and Industry (SCDI) forum at the Fairmont Hotel, St Andrews.
Prof Garelli suggested that Scotland did not yet have enough medium-sized industries to ensure economic success after independence.
He said independence would reduce Scotland’s voice in Europe and warned against Scotland becoming over-reliant on North Sea oil, suggesting that manufacturing and exports needed to be expanded.
Last night, a Scottish Government spokesman dismissed Prof Garelli’s claims. He said: “The clear position is that an independent Scotland will retain sterling, and there are strong benefits for the rest of the UK as well as Scotland in being part of a sterling zone. For example, Oil and Gas UK estimates that this sector alone boosted the UK’s balance of trade in goods and services by £32 billion in 2010 – almost halving the UK’s deficit.
“We are focused on our policy of sharing a successful sterling area with the rest of the UK upon independence, and therefore membership of the euro is neither a short nor medium term prospect.”
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