Greek lessons for Scotland

Who controls Greek economic policy? It’s hard to give a full answer to that question in this short space. Any half-decent attempt would have to mention Mario Draghi (president of the European Central Bank), the International Monetary Fund, and maybe throw in a nod to German chancellor Angela Merkel.

But I can tell you one thing for sure – it’s not the Greeks. If the Greeks want to keep the euro as their currency – and despite everything, they keep voting as if they do – then they have to do what the rest of Europe tells them.

Why am I bringing this up now? Because of the ridiculous debate over Scotland’s currency. With less than a month to go until the independence referendum, the nationalists are falling over themselves to persuade voters in Scotland that they’ll be able to keep the pound if they vote ‘Yes’ – despite the resounding “Oh no, you won’t” from every party in Westminster.

So keen were they to give this impression that the Bank of England even had to give Scottish finance minister John Swinney a public telling off last week after he suggested that the nationalists had held – entirely fictitious – “technical discussions” with the central bank over a potential currency union.

I don’t want to run through the options for future currency arrangements yet again here – we’ll have a longer story on the implications of independence in the next few weeks. But what I find ridiculous is that the status of the pound should even be a debating point at this stage, let alone the definitive issue.

A country can’t be fully independent if it doesn’t have its own currency. The Greek experience makes that absolutely clear. For as long as it wants to hang on to the euro, everything from its employment policy to its tax-collecting arrangements to spending on public services is under scrutiny and dependent on the approval of people who aren’t Greek voters.

So, anyone who genuinely wants independence for Scotland (I’m against it, but each to their own), should be appalled by the idea of keeping the pound.

Sure, I can understand why the nationalists might balk at the idea of publicly embracing a new Scottish currency.

It’d be a major step into the unknown. It would take a long time to prove itself on the global stage, and it would likely be extremely volatile, and horribly influenced by oil prices. Not to mention the hassle of changing money every time you crossed the border.

In short, it’s not a vote winner. And that’s the real problem. Because in between the unreconstructed Old Labour socialists at one end of Scotland’s political spectrum, and the wishful-thinking of the ‘Singapore of the North’ camp at the other, there’s a whole group of people for whom the Union basically works rather well.

And if they can’t be convinced by honestly presented, warts-and-all policies, and have to be swayed by appeals to base tribalism and misty-eyed romance, then what sort of platform is that to launch a new start from?

  • jimtaylor

    “in between the unreconstructed Old Labour socialists at one end of Scotland’s political spectrum, and the wishful-thinking of the ‘Singapore of the North’ camp at the other, there’s a whole group of people for whom the Union basically works rather well.”

    I agree, and the silent majority will prevail provided enough of them can be bothered to get out and vote “No”.
    The risk is that the Yes voters may be more motivated to make the effort to vote as they will realise that they will only get Independence by voting “Yes”, whereas some Unionists might sit at home hoping for a “No” result.

    Voting should have been made compulsory for this Referendum to make sure the result is a true reflection of the Nation’s wishes.

  • John Morgan

    Its not the ‘Singapore of the North’ it will be the ‘Switzerland of the North’ 🙂

    I love it when Westminster politicians say we wont keep the pound. These are the same people that said Iraq had weapons of mass distruction, MPs dont fiddle their expenses and there is no danger to the economy just before RBS crashed.

    1) It is our Sterling as much as Englands.

    2) There is loads of oil in the North Sea.

    3) You can put your trust in Mark.

  • Russell Bruce

    You have been away from Scotland too long John. We always have had to change currency notes before crossing the Border. The maintenance of cross border trade is in the interests of both parties and preventing the introduction of transaction costs. rUK trade with Scotland is more than what we export south giving rUK a wee boost to your poor performance in the current account. Comparing a currency union between Scotland and England to the situation of Greece is nonsense because Greece does not have the broad diversification of the Scottish economy.
    Only those Euro countries who failed to maintain fiscal discipline after joining the Euro find themselves in such difficulty today. If some of us have concerns about a currency union with rUK it is that UK’s record of controlling spending and managing ever an increasing debt burden is no a good omen. Budgets are balanced in Scotland each and every year and we can make considerable savings on the costs allocated to us under present arrangements. Trident first. Whatever you might fondly believe, Scottish defence interests are completely inadequate in the shambles of MOD management. Cumbersome and costly Whitehall departments will be replaced with modern departments working directly to key government objectives. The tax system will be simplified and streamlined. UK needs to do better much better and it is a genuine wish that you will find a way back to reality. It is not in our interests that an important trading partner cannot come to terms with its structural deficiencies. Scotland faces challenges too, but that we recognise and are ready to set about the transformation needed to create a modern 21st century country.

  • EM99

    Hi John, the points made by John Morgan and Russell Bruce seem quite reasonable and well argued. It would be great to hear your (or MSW) reply.
    Best wishes,