Currency Union?

[Who Knows]

The chancellor has announced he is "unable to recommend" a currency union based upon the advise given by his senior civil servant in a 78 page document.

 

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/279454/CM8815_2901849_SA_SterlingUnion_acc.pdf

 

What now does the future hold if Scotland votes Yes in the referendum on 18 September?

 

The Scottish Government position is still for a shared £ currency zone between Scotland and the remainder of the UK (rUK) as laid out in their white paper Scotland's Future.

 

Business Scotland a pro Yes independent business group also support as their preferred option a shared £ currency zone and have laid out their position clearly why it is in the interest of both Scotland and rUK on their website.

 

http://www.businessforscotland.co.uk/no-campaigns-political-posturing-on-currency-lacks-business-sense-and-economic-credibility/

 

Both believe that the position announced by the UK Government and supported by the official opposition is just bluster and the opening gambit to the negotiation position stance following the outcome of Septembers vote. Whether bullying and buster or a frank line draw in the sand you can draw your own conclusions.

 

However a real independent take on the legal issues involving the currency union, benefits and negotiating stances has been under taken by Christine Bell of Edinburgh University can be read at

 

http://www.futureukandscotland.ac.uk/blog/currency-reflections-legal-issues

 

However if a shared £ currency zone is not on the offer there are a number of independent groups and individuals believe that Plan B is actually the best solution to Scotland.

 

The Adam Smith Institute which is consider right wing in its outlook and has no connection to the Yes Campaign argues the best of both worlds is for Scotland to remain using the £ sterling outside a formal currency zone.

 

http://www.adamsmith.org/news/press-releases/comment-an-independent-scotland-would-be-better-off-using-the-pound-without

 

This is also a view expressed by the Deutsche Bank as reported on line.

 

http://www.poundsterlinglive.com/breaking-news-articles/877-why-scotland-should-peg-an-independent-currency-to-the-british-pound-sterling-554654

 

The leading economist for the Jimmy Reid foundation common weal project Robin McAlpine on his own blog covers the currency issue and other issues related to this on successor states also backs this stance

 

http://www.cmonscotland.org/#!Currency/c112t/C1626DDC-F8BF-40C4-98AE-26D348F165F3

 

Therefore no matter what happens likely to be using the £ sterling no matter what the outcome the only issue is whether it is by mutual agreement or not as 3 possible scenarios exist.

 

Vote no - Stay in UK use the £

Vote yes - Formal agreed currency agreement using the £

Vote yes - Use £ regardless without a formal currency unit

 

In the event of a Yes vote Ladbrokes are currently offering 3 to 1 on (1-3) that Scotland will using the GBP£.

Edited February 14, 2014 by Who Knows

[JustMe]

I seem to have heard that an independent Scotland would want to join the E.U.  Also seem to have heard that E.U. rules say new entrants, which is what Scotland would be, must use the Euro.  So surely a yes result means we adopt the Euro.

[Rasmie]

i don't agree with, but can understand the sentiment of those anti-English / chip on shoulder Nats that want to be independent of England, but It seems that they are not willing to bite the bullet and separate completely. The still seem to feel the need for the comfort of the Bank of ENGLAND holding one hand, and Her Majesty holding the other. If they feel so strongly about independence they should be willing to make the break at any cost!

[Colin]

I seem to have heard that an independent Scotland would want to join the E.U.  Also seem to have heard that E.U. rules say new entrants, which is what Scotland would be, must use the Euro.  So surely a yes result means we adopt the Euro.

This, AFAIK, is true.

 

Does anyone really believe that any kind of currecy union is true 'independece'? 

Would retaining the Queen as head of state be true 'independence'?

Would becoming a member of the EU be true ;independence'?

 

Even retaining the £ without a currency agreement is not independence as Scotland's wealth(?) would then be subjected to the vagaries of another countries economy.

 

I think that 'The Fish' (Salmond and Sturgeon) are being a little economical with the argument in the hope that the general electorate (The Sheeple) get sleepwalked into voting yes without ever having had a proper discussion.

 

Think about it.  A proper discussion on the merits of leaving The Union should take years not months and, should not include embracing all the things that Scotland's ancestors fought against.

Edited February 14, 2014 by Colin

[MuckleJoannie]

Having currency union means that trading with England, which is Scotland's main customer, will be a lot simpler. Businesses won't have the hassle and expense of currency exchange.

[Colin]

Having currency union means that trading with England, which is Scotland's main customer, will be a lot simpler. Businesses won't have the hassle and expense of currency exchange.

Maybe true but, if so, I wonder how the China's etc. of this world manage to trade so succesfully.

 

I suspect that what Salmond et. al. are afraid of is that the 'Wee Bawbee' (or whatever home currecy Scotland may be forced to adopt) will have little or no value internationally and will force our prices upwards.

[werder]

 

Having currency union means that trading with England, which is Scotland's main customer, will be a lot simpler. Businesses won't have the hassle and expense of currency exchange.

Maybe true but, if so, I wonder how the China's etc. of this world manage to trade so succesfully.

 

I suspect that what Salmond et. al. are afraid of is that the 'Wee Bawbee' (or whatever home currecy Scotland may be forced to adopt) will have little or no value internationally and will force our prices upwards.

 

 

China can probably afford to trade so well due to the fact that they use child labour, have incredibly poor working conditions for the majority of their working population & have a population in excess of 1billion. Or something like that.

 

Anyway, a ridiculous comparison. 

[Colin]

 

Anyway, a ridiculous comparison. 

 

What was ridiculous about it?

 

Scotland sells salmon and whisky (to name but two) all over the world and, last time I looked, nobody was claiming that foreign currencies were causing a problem.

[Who Knows]

The Scottish Government White Paper states that they want Scotland to remain in European Union (EU) and if accepted but do not retain the current opt out on Euro the current rules do not allow Scotland to formally join the a Euro in March 2016.

 

There is a formal process and a set of "Euro convergence criteria" that new EU states require to comply with before membership is conferred.

 

The 5 criteria to for fill are:

1. You require to have your own currency which is required to join the European Exchange Mechanism (ERM2) and must operate within that for at least 2 years without breaching the rules to prove exchange rate sustainability.

2. The total debt of the country should not exceed 60% of the countries Gross Domestic Product (GDP)

3. Country needs to prove sound fiscal policies on public expenditure within in year deficits not exceeding 3% of GDP

4. The rate of inflation must be within 1.5% of the lowest 3 current members inflation rate. E.g. If the lowest rate in these 3 countries was 1% than Scotland's rate would need to be 2.5% or less.

5. Durability of convergence that the countries long term debt interest rate is within 2% of the lowest rate of the best 3 current members to show price stability. That is rate at which the government borrows money which currently is lower for Euro members such as Germany than the UK. This means that if the rate governments borrow at was 2% for the top 3 countries then over a period of time Scotland would have to borrow at 4%.

 

Scotland currently cannot meet the convergence criteria by March 2016. It could choose to use the Euro outside a formal currency union though just like the pound.

 

The Scottish Government council of economic advisors, "The Fiscal Commission", covered The Euro as a potential option in their currency option paper that conclude a £ currency union was best. This paper can be accessed on line.

 

http://www.scotland.gov.uk/Publications/2013/04/5881/0

 

I cannot speak for or claim to represent Germany, France, Netherlands or any of the other current members of the Euro but I would be surprised even though they have all ceded some sovereignty via being in the Euro that they do still consider themselves separate independent nations. In today's inter connected world there are very few countries who are not influenced economically by issues outside their border. The banking crisis was blamed by some on USA sub prime mortgages.

 

Colin clarity on what you consider the definition of true Independence to be would be helpful to understand your argument. Therefore could you please explain.

 

In terms of the Monarchy the union of the crowns in 1603 preceded the union of the parliament in 1707 as King James vi of Scotland inherited the thrown of England. Today the Queen is currently head of state of a number of countries that have gained independence from the UK details of which are on-line

 

http://en.wikipedia.org/wiki/States_headed_by_Elizabeth_II

 

The list of countries that have gained independence from the UK is quite long and started with the USA so some have made it work for them better than others

 

http://en.wikipedia.org/wiki/List_of_countries_that_have_gained_independence_from_the_United_Kingdom

 

As both the chief executive of Barclays and the Royal Bank of Scotland recently said the choice is ours on 18 September and they will adjust there business as required. There are currently 192 members of the United Nations and they do not all share the same currency, tax regimes, laws or government and to varying degrees they co-exist.

Edited February 15, 2014 by Who Knows

[Colin]

Colin clarity on what you consider the definition of true Independence to be would be helpful to understand your argument. Therefore could you please explain.

Neat attempt at a diversion.

 

A good attempt at answering your question is in the post that you are querying.

 

I can't speak for anyone else but, my idea of true independence is based around;

 

1. Your own laws.

2. Your own borders.

3. Your own currency.

4. Lots more 'your owns'

 

There is enough in the 1st 3 points to fill several hundred pages of discussion hence my original quote;

"A proper discussion on the merits of leaving The Union should take years not months"

 

Now, as I have stated that they are my own views, could you explain to me why I should feel the need to enlighten everyone else..?

[shetlandpeat]

^I think you should explain, you expect others to do so, yet do not go by your own expectations.

 

I feel that if there is a Yes vote, the Gov  will capitulate with regards to the currency, it would be in the best interests of all. The reasonings behind the no to sharing the pound is to sway a no vote.

 

At the moment, we are shooting our unlicenced air weapons without any real targets.

[Rasmie]

If it is a yes vote, there will be Tory government in the UK for the next 100 years, because there will be no Scottish labour MP's.

 

I don't think you or Wee Eck can predict what a foreign government might do.

I somehow don't think this is an idle threat as I imagine that he (W.E ) will continue to be seen a thorn in Westminster's side as long as they have to have any dealings with him.

I thinks that Colins explanation "I can't speak for anyone else but, my idea of true independence is based around;

 

1. Your own laws.

2. Your own borders.

3. Your own currency.

4. Lots more 'your owns'

 

is pretty self explanatory

[Colin]

At the moment, we are shooting our unlicenced air weapons without any real targets.

If I had a gun, I would have no problem finding a target.....

[Who Knows]

Thanks for expanding your argument on true independence however my interest was not an attempt at a diversion but expanding the debate as in my opening post I highlighted the top 3 views regarding what the currency options could be and you appeared to have a different view that is a perfectly reasonable stance to advance.

 

Some parts of the media see the no formal currency agreement as a major issue. The purpose of the discussion is to open up the debate so that people here on Shetland see that this is not the only workable solution available and that it may not be the best as you are advancing.

 

The international media though seem to have taken an interest with the Wall Street Journal choosing to post the following comments on Thursday's announcement

 

http://blogs.wsj.com/economics/2014/02/14/how-scotland-can-keep-the-pound/

 

and further academic comment by the Institute of Economic Affairs lays out options

 

http://www.iea.org.uk/sites/default/files/EA%20Autumn%20cover%20story%20lores.pdf

 

The debate in earnest started back in August 2007 with the launch of the national conversation based around the White Paper "Choosing Scotland's Future" which was followed in 2009 with another White Paper for the proposed Referendum Bill. However between these two papers Wendy Alexander tried to get a referendum back in May 2008 with the "bring it on" offer.

 

I would like people to take part in an open democratic debate covering the issue freely and openly to get a fuller understanding of the options on offer and vote for the future they believe fits best.

 

Scottish MPs impact on the West Minister outcome is often over stated. It's a bit of an Urban Myth that without Scotland Labour could not win a majority. The last 3 Labour Governments in 1997, 2001 and 2005 would still of had a majority.

 

http://www.newstatesman.com/blogs/the-staggers/2012/01/scotland-labour-majority-win

 

Since 1955 when Scotland last voted for what is now the Conservative Party the BBC's analysis show it only altered the out-turn on 3 occasions.

 

http://www.bbc.co.uk/news/magazine-25035427

 

The most recent of these was the 2010 election, as without the Scottish MPs the Conservative Party would have had an out right majority.

 

The vote in September decides whether Scotland remains in the UK or becomes a new independent state. If Scotland votes Yes then the first election to determine the Government is in May 2016. The vote in September is not about voting for or showing your support for the SNP, Liberal Democrats, Labour, Green, Conservative or a particular politician.

[Colin]

The vote in September is not about voting for or showing your support for the SNP, Liberal Democrats, Labour, Green, Conservative or a particular politician.

Given that the majority of parties you mentioned are against independence, I would argue that the vote would depend very much on whether, or not, you supported the SNP (who have made no secret of independence being their long term aim).

Personally, I think that Salmond has done a pretty reasonable job of running Sotland but, I don;t believe in his vision of independence and, I wouldn't trust him any further than I could throw him...