Published on 23 Apr 2013

Osborne and the ‘unlikely’ currency union with Scotland

Am in the Trade Hall in Glasgow watching George Osborne launch the Treasury paper that says an independent Scotland shouldn’t bank on being allowed to join a currency union with the old UK it would’ve just left.

The SNP think it’s all bluster and scare tactics and that the remaining UK wouldn’t in reality risk destabilising its economic partner and social neighbour by refusing to come to a currency union deal with Scotland. Mr Osborne actually went further than the Treasury document saying currency union was “unlikely”, not just “challenging.”

He also repeatedly drew unhappy parallels for Scots to think on before they vote in September 2014. He talked of the relevance of Cyprus’ recent agonies to Scotland’s future. He repeatedly equated Scotland with Panama which has the US dollar but no say over policy.

The full report from the Treasury got stuck in a courier van making its way up from London and so wasn’t available to read for the audience in the hall. Maybe it was stuck at customs.

Snappers were prevented from taking pictures of the chancellor’s arrival in the sort of vast limo with tinted windows favoured by US presidents. To be fair, it had a lot of civil servants in it.

I hear there’s been talk behind the scenes about whether the remnant UK should threaten a referendum in remnant UK on any future currency union – a certain logic to that for a Tory party that’s raged against “ever closer union” in the European context. But George Osborne isn’t ready to go there just yet.

Talk to some in the Better Together campaign and you could think this referendum is won and over. But some longer in the tooth are much warier. They point out that the pro-independence team needs only 40 per cent or more to score something that would look and smell something like victory and certainly make a unionist victory feel pyrrhic.

It would keep the flame of hope alive for nationalists and pile on the pressure for a big leap forward on devolution. They also worry about pro-union private polling that suggests their vote is very flakey in parts, that younger men under 35 who feel their futures are bleak might be susceptible to a nationalist message that they should take a flutter on independence – it might be better, it can’t be worse.

They worry too about the impact a tightening of the polls in the UK-wide position might have if Scots voters think there’s a decent chance the Tories will come back into power in the 2015 general election.

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12 reader comments

  1. David Back says:

    It is outrageous that voters in the rest of the UK have no vote on Scottish independence. We are being disenfranchised on a decision which will effect us all. Salmond wants to have his cake and eat it too – it is time to play hard ball. Has he learned nothing from the euro debacle?

    1. Dan Holmes says:

      It is outrageous that voters in the rest of the EU have no vote in the UK in/out referendum. We are disenfranchising all other EU citizens on a decision which will affect them all. Cameron wants to have his cake and eat it too – it is time to play hard ball. Has he learned nothing from the … oh, wait.

    2. Steve Willis says:

      I agree. The referendum on Scottish Independence undermines the Act of Union between Scotland and England.

      At the very least the people of both countries will be materially affected by any “Yes” vote in the referendum. I think Lord Lorburn’s principle applies and the residents of England have as much right as the voters in Scotland to participate in the Referendum.

      Perhaps, the English are being discriminated against on the basis of our “other status” i.e. residents of England which I would suggest breaches Article 14 of the Human Rights Act?

  2. cynicalHighlander says:

    Recycle, repackage, repeat

    Euro, Pound Sterling or Scottish Pound?

    If you were to take oil, whisky and food exports out of the sterling zone, the balance of trade deficit could cause sterling to sink like a stone, and so would the English economy. Not only would that be bad for Scotland, but it would be bad for our friends in England and that is reason enough – we will still be from Britain (it is an island) after independence and England will probably always remain our best friend, and trading partner.

    Scaremongering from a failing chancellor as they cannot come up with a positive for continuing the Disunited Kingdom.

  3. Henry says:

    Outwith London and the South East the Scottish economy is still quite vibrant and a very good contributor to the UK Tax take, so what we’ve got here is just typical scaremongering that we all repeatedly hear.
    When or if Indpendence comes Georgie boy will recognise that he’d better not bite his nose off to spite his face and discuss reasonably with the Scottish government the best way forward for both parties. Making threats like this is unhelpful at best and in fact is only stirring up divisons to suit the Bitter Togethers.

    As Swinney has quite rightly pointed out his negotiating postion may be well be….. “we can’t take any of the UK debts then”…and why not? If Georgie boy wants to play hard and bitter thats what he gets.
    Personally speaking after all the bitterness from Bitter Together and acceptance of dodgy donations..I’d be quite happy not too accept ~10% of the UK debts. Good negotiating position if that’s what Georgie boy actually wants to start at this stage…sending little Tory toffs to Glasgow to spout this kind of stuff does not go down well here.

  4. Philip Edwards says:


    If Scotland leave the Union it will be a tragedy for everybody. An understandable tragedy to be sure, but a tragedy none the less.

    Of course if that is what the Scottish people truly want then it must come to pass. That is democracy.

    The main root motivation goes back a long way. But in recent years another main root has been the deliberate centralisation of wealth and decision making around London – and the SNP has taken full political advantage of it.

    If Scotland does go, and makes a success of it, you might want to consider what that will mean for Wales and Northern Ireland……and then the vast majority in England outside London – where, I have warned time after time, there is a growing, deeply rooted resentment of what has been done to the rest of the country.

    And for all this we can “thank” the tories, New Labour and the LibDems skulking behind their Westminster shawl.

  5. Chris Fergusson says:

    The Chancellor needs to waken up to the very ‘real’ possibility that Scotland will give a ‘Yes’ vote come 2014.
    When this time comes he needs to show that he has given some thought to how things would be split.
    If the Chancellor sees fit not to give Scotland the pegging to Sterling then things will be split. If he calls no, then he shall loose £40 billion overnight and Scotland will carry-on, this is not London this is Scotland who’s population is 5 Million, there is plenty of Security Money available.
    Alex Salmond is currently running rings round the chancellor, as he knows that what is on the table here, not sure the same can be said for the Chancellor does as he appears to be giving it about as much thought as he usually does, which ain’t a lot.

  6. Creature says:

    These guys are a farce – they can’t even get their report to the launch of their report, and then talk about Panama when they know that the nearest parallel with Scotland would be Ireland, who used the pound quite happily for 50+ years after shaking off the need to be governed from London.

    Would the Bank of England really be happy to lose £50 billion from sterling’s balance of payments annually? That’s what this threatened spiteful action would do instantly by cutting Scotland out of sterling. Even if it was possible to do it, the Bank of England wouldn’t want to. Danny Alexander should hang his head in shame for trying to pull the wool over his own countrymen’s eyes – just to try and hold on to a wee bit of power.

  7. dave the ferryman says:

    Osborne is typical of all the London based scaremongers, this might happen, this could happen, this is unlikely to happen. No one will ever say what WILL happen.

    There is only one thing that is certain, Scotland will vote YES next September.

  8. squarego says:

    The pound is as much Scottish currency as English or Welsh or Northern Irish. Osborne is speaking as if it’s English money and we’d have to beg to have some. This is the sort of arrogance which drives people towards a Yes vote.
    Scotland owns a proportional share of the Bank of England, just like the rest of the UK. We use the pound at the moment and have little or no say over monetary policy. Why wouldn’t we keep using the pound (which is ours) and take it from there. If in the future it doesn’t suit our purposes (Scotland will be on a path quite different from the current UK one on many things – investment in renewables, care of the sick and elderly, free education etc) – Then the people of Scotland will decide when and if we change to something else.

  9. Bill Craw says:

    You should look at the article in the “Herald” on Osborne’s visit to Glasgow, especially the readers’ comments on the subject.
    Very illuminating, and more representative than the comments expressed by the punters interviewed in the street.

  10. haskkh says:

    If the Scots vote for independence it would be irresponsible for any UK government not to deliver. The wording in the referendum asks Should Scotland be an independent country Yes/No?
    This is binding on both sides of the border as it is regulated by the EC. If the politicians north of the border wish to cherry pick policies they wish to make “independent” then they are doing Scots a dis-service. Westminster is dutybound to deliver in terms of the question answered in the referendum. If the SNP want to make it more flexible then they should reflect this in the question and make it unambiguous.

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