Lessons for Scotland on Greek currency

Supporters of Scottish independence resent comparisons between Greece and Scotland, as Peter Jones made in an article about the 
“Greek tragedy” (Perspective, 29 June).

They point out, rightly, that Greece and Scotland are very different countries with very different economies.

However, the main point of such a comparison is the currency issue. Greece does not have its own currency.

It is in a monetary union using the euro and it is now being forced to cut its spending or leave the union.

How did Greece end up in this predicament? The answer seems to be that it was borrowing and spending at an unreasonably high rate on the strength of its membership of the EU.

Lenders provided the money it wanted because they thought that the EU was their surety for the loans. Now the EU has declared that Greece has piled up too much debt and the plug has been pulled on its spending.

Whether it stays in the Eurozone or reverts to the drachma, Greece will have to cut its spending drastically.

An independent Scotland which opted to use the pound would be in the same position as Greece. Lenders might think that the UK was a surety for loans to Scotland, with the result that borrowing and spending would be far too high and out of proportion to the Scottish economy.

The SNP have already declared that they intend to be a spending government, which could in practice mean an overspending government.

The comparison with Greece would then be painfully obvious when financial crisis would bring Scotland to its knees and probably damage the UK economy as well.

The obvious conclusion is that an independent Scotland must use its own currency. The dangers of joining the euro are plain to see and the dangers of using the pound outside the UK would be the same.

If Scotland is going to be independent, let us have no half-baked half measures. An independent country should have its own currency and its own banking system.

Of course, there are risks attached to monetary independence, the main one being that people might have to accept a reduction 
in their standard of living and cuts to their public 
services.

But only a fool or a dupe would think that splitting apart Scotland and the UK would be risk-free and cost-free.

No canny Scots worthy of the epithet would think such nonsense, would they?

Les Reid

Morton Street

Edinburgh