In all the talk about how Scotland might or might not end the decade an independent country, all sorts of things are being just a little too fudged.
Offering any sort of idea of just what Scotland might be like as a financially independent nation is tricky given that the referendum is just that - a referendum. As Tom Miers rightly points out it is not an election. So while it is possible that the Scots will vote for independence (although the polls still tell us that they are more likely to vote for continuing union) it is also possible that in the first election after the referendum they will not vote for Alex Salmond.
The referendum looks set to be in 2014. Salmond wants to see an independent Scottish parliament by 2016. However, the next election to the Scottish parliament is in May 2016, something that creates the possibility that Salmond might not still be the big man if his dream comes to fruition.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Still, just because he can't be sure he will get to be in charge doesn't mean he shouldn't give the important stuff some thought. So far it isn't entirely certain that he is.
Take monetary policy. There has been some confusion about which currency Scotland might use. It has now been confirmed that it will be part of a sterling zone.
You might wonder why Salmond would want to have his country using someone else's currency, and hence their monetary policy, given how we now know that tends to end up. You aren't alone.
He says that Scotland would be able to influence the monetary policy set by the Bank of England for the benefit of England and Wales because it would have a role of some kind at the MPC. This, as the Times points out today, is a "scenario immediately dismissed by the Treasury."
But monetary policy isn't the only thing the SNP, now they come to think of it, don't really want to control. The front page of the Times today notes that they now say that, in the event of independence, the "highly integrated UK financial services market" would remain as it is ie the BoE would continue to regulate the Scottish financial industry.
That leaves, as the unionists have wasted no time in pointing out, a situation in which a foreign central bank would set Scotland's interest rates, monetary policy and financial regulation. At least now Scotland has a say over this stuff. It looks like under independence it wouldn't have a say so it'd have less control than it has now.
So what might Scotland have more of a say over as an independent state than as part of the union?
How about tax? To a degree it is true that if Scotland plans to give up control over its monetary policy it automatically gives up control over its fiscal policy. But that doesn't mean it can't fiddle around with how it raises its revenues ie its tax policy. In fact, starting a new state will give it a one off chance to be disruptive - not just to mildly improve on the current UK tax system, but to change it dramatically into a good system.
How might it do that? ICAS has put out a good report listing all the questions Scotland might ask. But the key question in it is: should a new tax system just be there to raise the revenue required to run a country (in which case it only needs to be simple, efficient and fair) or should it be there to influence behaviour? Most countries go for the latter which is why the UK tax system is so shockingly complicated and inefficient. Wouldn't it be nice if Scotland just went for the former via a flat tax perhaps?
-
Ofgem proposes new energy tariffs with low or no standing changesStanding charges have invited public backlash as households battle high energy bills
-
Google shares bounce on Gemini 2.0 launchGoogle has launched the latest version of its Gemini AI platform, and markets have responded positively. Is it time to buy Google shares?
-
Beating inflation takes more luck than skill – but are we about to get lucky?Opinion The US Federal Reserve managed to beat inflation in the 1980s. But much of that was down to pure luck. Thankfully, says Merryn Somerset Webb, the Bank of England may be about to get lucky.
-
Rishi Sunak can’t fix all our problems – so why try?Opinion Rishi Sunak’s Spring Statement is an attempt to plaster over problems the chancellor can’t fix. So should he even bother trying, asks Merryn Somerset Webb?
-
Young people are becoming a scarce resource – we should value them more highlyOpinion In the last two years adults have been bizarrely unkind to children and young people. That doesn’t bode well for the future, says Merryn Somerset Webb.
-
Ask for a pay rise – everyone else isOpinion As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why you should do that too.
-
Why central banks should stick to controlling inflationOpinion The world’s central bankers are stepping out of their traditional roles and becoming much more political. That’s a mistake, says Merryn Somerset Webb.
-
How St Ives became St Tropez as the recovery drives prices sky highOpinion Merryn Somerset Webb finds herself at the epicentre of Britain’s V-shaped recovery as pent-up demand flows straight into Cornwall’s restaurants and beaches.
-
The real problem of Universal Basic Income (UBI)Merryn's Blog April employment numbers showed 75 per cent fewer people in the US returned to employment compared to expectations. Merryn Somerset-Webb explains how excessive government support is causing a shortage of labour.
-
Why an ageing population is not necessarily the disaster many people think it isOpinion We’ve got used to the idea that an ageing population is a bad thing. But that’s not necessarily true, says Merryn Somerset Webb.
