I would guess many of you are the same. So I’ve been talking to my economics elders and betters over the last few days, across the indy movement. And there are two narratives that fascinate me most.
Why does the Scottish Government keep asking us to believe that the UK government is “bluffing and blustering” in rejecting a currency union? Perhaps this story might explain.
In January HM Treasury pledged to back all UK government debt, to the tune of £1.2 trillion, regardless of the referendum result.
This was intended to hold off the risk that global investors might – if they thought a Yes vote was likely – demand higher returns on the UK government bonds (or “gilts”) they held. The febrile possibility of this, in a hugely indebted UK economy which needs investor faith to stay afloat, lurks behind the manic desperation of Alistair Darling’s hammering away at the topic in the debate this week.
It’s not as if the rumour mill hasn’t been grinding over these months. Treasury voices leaked that Darling had hustled Osborne into making his implacable “no currency union” declaration in February. An unnamed minister briefed that “of course there would be a currency union” in the event of a Yes.
So Project Fear must triumph right now, and decisively so.
If the polls showed even the barest Yes majority a week before the referendum date, these global investors would (in the words of one pro-indy economics expert I consulted) “have the markets jumping all over the place like crazy”.
In this case, we would see a hasty, embarrassing – but of course “temporary” – concession to a currency union, days before the event.
So everything has to be chucked at the Yes vote. From the UK celebritariat to the US presidency, from pliant corporate execs to patriotic war commemorations – and yesterday, even a Miliband commitment to oppose CU in the next Labour Party Westminster manifesto.
Kill it early – in order to forestall this scenario of nervy markets wreaking damage on a less-than-robust UK exchequer, and a humbling last-minute climbdown.
That’s one story I heard. Here’s another. We’ve been talking for years about the importance of “confidence” in the politics of independence. Its overlapping surges are usually described this way. First, the cultural confidence – folk revivals and shipyard humour in the 60s and 70s, followed by the 80s and 90s novelists, poets, dramatists, visual artists, comics and musicians.
All this complemented by a continuously thoughtful “civic Scotland” – which produced the breakaway SLP, Radical Scotland magazine, the Claim of Right for Scotland, culminating in Donald Dewar’s steering of the Scottish Parliament through its various hurdles to its cross-party realisation.
And then the real political confidence begins to build, as the parliament finds its feet (after some early stumbles). Administration by administration – admittedly coasting on the false plenty of New Labour’s credit-bubble boom – Scots’ faith in their ability to govern themselves is restored and developed.
The first SNP administration is a flexing of the electorate’s new muscles, trying a non-Labour take on Scottish progress.
The second one, unravelling the parliament’s own mechanisms designed against an independence majority, launches everyone (with some surprise) into the ultimate test. Can we manage the total suite of powers – resources, finances, defences, welfare, media and diplomacy – as well as the minor powers we were first given? Answer: Yes, we do have the confidence to do this. Or: No, we don’t. And beneath the rolling thunder about currency, there is a real decision point, for any of us with a vote in this referendum.
Do you trust yourself, and the institutions of Scottish governance that you voted into being in 1997, to deal with the complexity of the world before us? With our independence and our interdependence?
If so, then you will be confident about the prospect of a Scottish government going into negotiation with a UK government across a variety of areas, currency being only one of the most important. If my first story pertains, Scots voters should regard a currency union as an act of magnanimity.
This new game is a long game, of course – and a separate currency regime for Scotland may well be a play we make, sooner rather than later.
But an independent Scotland should begin this new relationship with a mature sensitivity to the global financial context within which we all operate. And to the injured pride of a defeated opponent.
We will be patient and determined in negotiations – not in a saintly manner, but with Adam Smith’s “enlightened self-interest”, which takes a bold lead in trying to establish mutual benefit between two partners.
We’ll take a higher view than our large, understandably disgruntled negotiants. We will be the Scotland we wish to see, even in the stuffiest and sweatiest of Whitehall’s rooms.
So, two stories on the currency question, hard-ball and soft-ball. I have heard quite a few others this week. So two stories, but they only begin if there’s a Yes vote.
In this confusing stramash, are you searching for some hard, irreducible nugget of value? Well, there it is. «