As writer Iain Macwhirter puts it plainly: “Britain isn’t in a position to tell Scotland anything, and the pound is common property” But facts don’t seem a problem for our bullish Chancellor. He specifically said: “The people of the rest of the UK wouldn’t accept it [currency union]”. Yet this is flatly contradicted by polls which tell us: 81% of Labour voters support a currency union and 75% of LibDem voters.
He also described the impact of losing north sea oil revenues to the Exchequer as ‘broadly neutral’. It’s a curious statement from an individual playing high-octane politics who looks out of his depth, high on privilege and power but low on tactical nous or strategy.
Gideon George Oliver Osborne the heir to the 17th century baronetcy of Ballentaylor today came to Scotland’s capital to threaten people that if we choose to manage our own affairs he will try and wreck our economy.
George Osborne spoke today in Edinburgh, to give the man some credit at least he had the nerve to actually come north, he said: “The pound is one of the oldest and most successful currencies in the world. I want Scotland to keep the pound and the economic security that it brings.”
The problem is that he doesn’t, and the clear contempt he and the other parties hold Scotland in is quite remarkable. You can read the full text of his speech here.
One immediate impact of this escalation, which puts the debate in an entirely new framework, is how previously moderate voices will change tone. This will put a severe strain on some progressive Labour supporters finding it increasingly difficult to stomach the cross-party consensus – which now seems projected into an eternal future by Osborne’s remarks: “I don’t think any other Chancellor of the Exchequer would come to a different view.”
No doubt there will be a huge response to this. I think we can expect Henry McLeish to declare by the weekend with an orderly queue behind him. This will no doubt play well to the stage hypnotists at Better Together and the Red and Blue Tory twitterati, but for most ordinary people this will just seem like a shocking piece of vindictiveness akin to the Poll Tax, the Bedroom Tax, PFI or any other from the litany of economic distress caused by Westminster over the last thirty years.
The Tories would have been better sticking to their policy of just hiding.
We can predict several Devo Max enthusiasts to come over to Yes, a massive backlash from people not keen on being intimidated, and clearer voices from journalists and commentators are people are forced to take a position. Here’s one such riled by this approach:
Let’s be clear what this means. The rest of the UK (rUK) will unilaterally erect customs posts and force everyone to change money when they cross the Border. This would damage trade and free movement of people. It could mean sour-faced customs police nosing around in your car boot; tariff barriers, even. It would be a vindictive and self-destructive act that would damage England’s balance of payments and increase the cost of UK national debt.And, it probably will make anxious Scottish voters reluctant to vote Yes for fear of economic chaos. The Chancellor is trying to make independence an offer they can’t accept, though a referendum held under duress would leave a reservoir of bitterness. This may well go down in Scottish folk memory as coercion by the UK political establishment, an act almost of economic warfare. So much for Section 30 of the Edinburgh Agreement, which was supposed to ensure respect.Reuters reported the story as “Britain to tell Scotland: Leave the UK and Lose the Pound”. A historical howler as Britain was, of course, a joint creation of Scotland and England after a voluntary union. Britain isn’t in a position to tell Scotland anything, and the pound is common property.This is why the SNP say that, if Scotland is “denied” the use of the pound, an independent Scotland would no longer be liable for servicing the debts of the UK Treasury. If Scotland was locked out of its share of the monetary assets represented by the Bank of England (founded by a Scot), the UK could not expect Scotland to assume its liabilities. Scotland’s share of this amounts to some £6 billion a year, almost as much as the value of North Sea Oil.This is called “default” by Alistair Darling, chairman of Better Together, and it might look like that. But it would really be a kind of default in reverse, as the Scottish Government insists it is fully prepared to share the UK national debt as part of a currency union. This is not Ireland in 1933, when the Republic unilaterally ceased paying its negotiated share of the UK national debt and provoked economic war. It is the UK that is playing economic hard ball.
My guess is that Brussels will find some similarly symbolic way to penalise the Swiss. It might, for example, sententiously announce the exclusion of Swiss banks from elements of the single market. Such exclusion already exists, and suits most Swiss financial institutions, since their business model depends on not being covered by EU regulations. What the EU won’t do is prejudice cross-border trade with its neighbour.The same would apply, mutatis mutandis, to Britain. Our withdrawal from EU institutions would prompt angry speeches and vague threats and maybe some symbolic non-collaboration. But no one seriously thinks that the EU would restrict trade with what would be by far its largest export market – bigger than the second and third (the US and Japan) combined. In any scenario, EU countries benefit from free trade with Switzerland and with the UK – and, for that matter, with Norway, Macedonia, Andorra, Turkey and every other European non-member.The idea that the EU will harm itself in order to harm Switzerland depends on the notion that it is motivated by vindictiveness rather than self-interest. I don’t believe that for a moment. But if I’m wrong – if Eurocrats really would impoverish their own countries out of sheer spite – what are we doing allowing such people to rule us?