It’s about the pound in your pocket

To date the case for Independence for Scotland has been predicated on an emotional argument that involves telling any audience what they want to hear.  The SNP White paper was to answer all our questions on what an independent Scotland would look like, but it is nothing more than 650 pages of assertion.

This week has brought into sharp contrast how important the practical issues are when assessing what Scotland would look like in the event of a yes vote.  The currency is highest up the agenda of the public and has been propelled into the debate by the non-partisan and technical analysis of both the Governor of the Bank of England and the Permanent Secretary to the Treasury. The Governor said:

“It is no coincidence that effective currency unions tend to have centralised fiscal authorities whose spending is a sizeable share of GDP.”

“In short, a durable, successful currency union requires some ceding of national sovereignty.”

The central message of the Governors speech was that currency union requires fiscal, economic and political union to avoid financial crisis. It is precisely that fiscal, economic and political union that the SNP seek to dismantle with independence.

Alex Salmond used to say that the pound was a millstone around the neck of Scotland and favoured the Euro.  But surely the fact that he has changed his mind, on the basis of the problems with the Euro, is the very same reasons attributable to a formal currency union with the pound?

What is wrong with the Eurozone?  It hasn’t got the level of fiscal, economic and political union that the Governor of the Bank of England says is essential to make any currency union work effectively.

The Eurozone is now seeking much more co-ordination of these aspects.

In the light of the Eurozone experience, it would be particularly risky for the UK to do it, carrying risks for economic and financial stability on both sides of the border

Given that economies sharing in a currency union have to be closely divergent the creation of a currency union would not be a decision only for Scotland, but for the whole of the UK.

What the impartial Permanent Secretary to the Treasury has done is give the civil service opinion on that UK wide decision and injected some reality in the debate by advising that the UK Government should rule out a formal currency union.

All 3 major UK parties have heeded that advice and have done just that.  It is the responsible and credible thing to do.  It would have been the easy way to say it’s a Tory Chancellor so we should dismiss it but this issue is far too important for Scottish jobs, the Scottish economy and Scotland’s future for it just to be ignored as the yes camp would wish us to do.

Many pro-independence commentators have said today that we should just continue to use the pound without a formal currency union with rest of the UK.  However this is clearly even more difficult because it would mean that no bank could be located in Scotland due to not having a lender of last resort, borrowing would be more expensive and it would leave Scotland exposed to economic shocks without the support and stability of the UK monetary system.  Think 2008 and the banking collapse.  The tens of thousands of my constituents who work in the financial services sector deserve to know what the implications for their livelihoods are in this currency debate.

We would also be in the same situation as El Salvador and Panama who do this with the dollar.  That’s hardly comforting.

It is now clear beyond any doubt – the only way to keep the Pound is for Scotland to remain in the UK. People need to know that when they vote in this referendum that they will be voting to keep the security and stability of the Pound –  the pooling and sharing of a well established currency.  To be clear, a vote to leave the UK is a vote to lose the Pound.

Alex Salmond has no plan for currency in an independent Scotland. The SNP wanted to turn the pound into the “Eurozone” but rightly the rest of the UK has said they don’t think this is a good idea and recent history shows that to be correct. Given the SNP Government has ruled out using the pound without agreement in the way Panama uses the dollar. So what money will Scotland use?

What we need now from the SNP isn’t so much a Plan B but a Plan A. Now that using the Pound is off the table, would we be rushing to join the Euro or set up an unproven separate currency as suggested by SNP grandees or the Chair of the “Yes” campaign?

The people of Scotland deserve to know.

It will also not be lost on the people of Scotland that Alex Salmond is making reckless threats about defaulting on debt.  That would put jobs, businesses and livelihoods in Scotland at risk. People know that if you don’t pay your bills your credit rating goes bad and that means everything from mortgages and credits cards to bank loans and overdrafts become more expensive and difficult to obtain.  To even threaten to default is as irresponsible a government can possibly be.  The ramifications could ripple right through every community in Scotland.

You can sum up the SNP currency proposition today as being this – you go from a single currency backed by a strong lender of last resort as part of the UK to a promise from Alex Salmond that he simply is not in a position to deliver.  That is not good enough for the Scottish people and not good enough for Scottish business.

And before I am accused of the “scaremongering” as seems to be the standard response when you ask a legitimate question to which the Nationalists do not know the answer – I think one of the most positive cases for Scotland remaining in the UK is the Pound.

Ian Murray, MP for Edinburgh South and Shadow Minister for Trade and Investment