Sunday, 15 January 2012

Joining the Poundzone

One of the more amusing features of this week's phoney war over the Scottish referendum is the speculation over what would happen to the Scots currency in the event of independence.

Many unionists, as we must now learn to call them (something that Labour MPs from the green side of Glasgow must find rather odd), have been quick to point out that the continued use of Sterling would be the equivalent of joining the Euro. In today's Observer Alistair Darling notes:

If Scotland kept the pound it would be in a common currency with a foreign country (England), whose central bank (the Bank of England) would set its interest rates and do so not in Scotland's interest but in the interests of England, Wales and Northern Ireland.
This is a tad disingenuous as the BoE does not have a track record of setting rates with regard to what will work best in Cardiff or Leeds, let alone Belfast. What matters are primarily the needs of the City of London (Cameron made this priority clear in Brussels), followed closely by the impact on mortgage holders in the South East.

The major natural border on the island of Great Britain, which matches the mental horizon of the Bank and the government, does not run between Carlisle and Berwick, but between the Severn and The Wash.

The real issue here is not one of currency but of the power to levy taxes and set expenditure. It is perfectly feasible to devolve these within a single currency, as shown by the USA and other federal states. The danger of "devo max" (which incidentally sounds like a best of compilation by the Ohio art-rockers) is that the logic would apply equally to Wales or Northern England. This may be why Cameron & co are keen to bury that option.

Should the Scots decide they need their own currency, they should follow the example of the Irish (pre-Euro) and just come up with something that sounds vaguely familiar, like the Punt. Perhaps they could call it the Panda, in honour of their new national beast.


  1. I heard that as a "new" EU country Scotland would be obliged to implement the Euro as their national currency. Perhaps they can get fiscal advice from Italy & Greece?!
    PS My vote is for rebuilding Hadrians' Wall - properly this time!

    1. One even more bizarre interpretation is that as the rump UK (i.e. sans Scotland) would technically be a "successor state" (like the Czech Republic after Slovakia ceceded), it would also have to formally reapply for membership of the EU.

      This is obviously less likely to lead to our adoption of the Euro and more likely to lead to the Europhobes securing a full in/out referendum. The cause of Scottish independence looks increasingly attractive to the Tory right.