Saturday, 16 November 2013

Will the UK continue to rule the Scottish Banknote

There appears to be an indication that if,(as proposed by the SNP ) a Independent Scotland would find itself tied to a United Kingdom pound then the Unionist will use this to control or even  wreck the Scottish economy.
By the way will the rump that remains stile be able to call itself the United Kingdom?
Writing in the always excellent Bella Caledonia Jamie Maxwell points out. that
Speaking in Glasgow a few months ago, George Osborne said currency union would impose “significant constraints on [an independent Scotland’s] economic sovereignty”. SNP leaders were quick to dismiss this warning in public, but privately they must have known it was far from an empty threat. The Chancellor, armed with standard Tory prejudices about Scottish profligacy, will do what he can to limit public expenditure north of the border, whether Scotland is part of the UK or not.Nationalists may hope Labour’s shadow chancellor, Ed Balls, would offer less restrictive terms during the negotiations over any prospective post-UK “sterlingzone”. They shouldn’t bank on it. Balls economic record suggests he would be at least as uncompromising as Osborne – if not more so.As an influential Treasury adviser at the time, Balls was one of the driving forces behind Gordon Brown’s decision to grant the Bank of England operational independence in 1997. The move completed Labour’s shift away from post-war Keynesianism and towards a form of monetarism based on “sound money” and rule-based spending constraints.
The Economic crash  probably ended any consideration that an independent Scotland should join the Euro and so the option before the SNP was and Independent currency or to remain bound to the UK pound.

There is a precedent for this from the foundation of the Irish Free state and the creation of Irish Currency in 1928 and the Republic of Ireland continued with a one to one parity and also introducing  Decimalisation at the same time as the UK.

This ended in 1978 when Ireland joined the European Monetary System when the UK stayed out and Ireland was to eventually adopt the Euro  replacing the Punt in January 2002.

But an Independent Scotland will be different and it must be sheer arrogance on the UK Chancellor Exchequer or governor of the Bank of England  ( whoever they me be ) that they alone can decide on how pound sterling is run.

Scottish Independence will be divorce of equal partners  but it looks like one is determined to still control the other . They well find that unlike the Irish Government from the period of tied-currency,an independent Scotland may well want a larger say in this .

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