A lot of hot air has been expelled in the last few weeks on the thorny question of what currency choices an independent Scotland should make. I attended the BBC Radio 4 Questions & Answers recording in Musselburgh a couple of weeks ago and Margaret Curran was fair hooching in her seat with excitement as she avoided answering the question on whether an independent Scotland would be economically viable and instead gabbled on about losing the power to set interest rates or print money if Scotland keeps the pound. The supposedly more sagacious Alistair Darling then let loose in the Scotsman saying that keeping the pound was an absolutely ludicrous position
One is tempted just to say pot, kettle black. Poor Margaret Curran does not even seem to remember that giving up the power to set interest rates was supposedly the late Gordon Brown’s masterstroke (whatever became of him?). And we have George Osborne to thank for the quote that “printing money is the last resort of desperate governments when all other policies have failed.”
In the Observer Alistair Darling said “if Scotland kept the pound it would be in a common currency with a foreign country (England) whose central bank (Bank of England) would set its interest rates and do so not in Scotland’s interest.” It is inconvenient for him to acknowledge that the Bank of England, and successive UK Governments of all parties, have given preference (out of necessity as much as choice) to an economic policy driven by the interests of the bastion of casino capitalism that is the City of London. Needless to say this has often been economically damaging to Scotland and indeed other parts of the UK.
It is clear that the anti-independence parties believe that the currency question is a vote winner and/or is at least an issue which can sow uncertainty. In response the SNP strategy has been to earnestly explain that the party would stick with the pound, at least in the immediate aftermath of independence. The difficulty is that when the discussion is reduced to soundbites this can seem a strange or counter-intuitive position.
Thankfully we have a couple of years to discuss this in more detail. It will be important in these discussions to spell out in more detail that a positive vote for independence is not actually about a specific currency choice but about having the power to make that choice. And to be able to evaluate the pros and cons of different options, which may well change over time, from the perspective of Scotland’s best interest.
In terms of the development of the discussion it would maybe do no harm to treat the Scottish public as grown-ups (if not the anti-independence parties) and acknowledge that the decision Scotland will have to make regarding our currency will be a difficult choice. It is of course complicated by the uncertainty surrounding the Euro. And it is not only French politicians looking for excuses who think the UK might be downgraded by the ratings agencies. It would be a brave person who would bet on where the pound will sit regarding other currencies in three years time.
The SNP position of sticking with the pound is almost certainly the best option for Scotland in the short term, but in order to explain that we need to make clear that it will not be a once and forever decision on the currency question. Depending on what happens to the Scottish economy and to the rUK economy after independence it may be in our interests to float our own Scottish currency or to join the Euro if that still exists in some form. The key message needs to be that we will have the power to decide in Scotland’s interest.
Isabel Fraser on the Politics Show Scotland was getting excited when interviewing Nicola Sturgeon about whether the post-Independence Scottish Government would have to negotiate with the Bank of England. The reality is that a post-Independence Scottish Government would have to negotiate with various actors no matter what currency choice it made – as all independent countries do. Nicola Sturgeon rightly pointed out that fiscal discipline would be an important priority of any Scottish Government. If we are going to have an intelligent debate about currency options and macro-economic policy then we need to stop pretending that any Government operates in a vacuum or that any of us can predict the future with 100% accuracy.
And we should also challenge the anti-independence parties to give their answer to the question. What does Alistair Darling think would be the best currency option for an independent Scotland? They should no longer be allowed to assume independence is inconceivable. And we should be open to the hypothesis that one or more of the currently anti-independence parties might be involved in Government at some stage after independence. Refusing to say what their policy would be in such a scenario would be an “absolutely ludicrous position.”