So, no share of national debt for an independent Scotland then..

Good article OldLady and certainly a lot to think about there.

Personally I think ruling out a currency union completely was a tactical error. It will make Scots feel like they're being bullied and dictated to. The complete opposite of what we want.

But at the same time you can fully understand both the government's position and the electorate.

The UK govt would be foolhardy to go against the advice of the BoE and the civil service who have both said it's not a good idea unless significant undertakings are given by Scotland. Something they won't do.

Also as I've said before iScotland seems to want to cherry pick the good bits and leave the bad bits. So yes we'll keep the pound because it's better than the Euro but in a few years if the alternative looks better we'll adopt that.

As with any divorce emotions will play a part and I can't see why the rUK electorate will stomach that.

The whole England would suffer in trade argument is exactly the same issue as our (UK) position with Europe. Namely if you don't let us cherry pick the policies we like and forget the ones we don't then we'll take our ball and go home. And guess what? France and virtually every other EU country are saying "Non!"

And bear in mind that the rUK is in a much better position weather any economic storms unlike Scotland whose economy wouldn't be able to mount a bank bailout.

Ultimately it comes down to this. If someone is threatening to leave, you can compromise a little to try and convince them to stay. But there simply is a line you must draw before you think "If you wanna leave, leave cos you're taking the piss now" After all, if iScots leave the union, the rest of us have to wake up the day after and look at ourselves in the proverbial mirror. And frankly I don't want to feel like I've been buttfucked.

futureukandscotland.ac.uk/blog/currency-reflections-legal-issues

Sorry I couldn't paste that as an MN link, but it's an interesting (and important) message.

Niceguy2….an excellent summary, I wish I’d have summarised it so – you’d think the ‘yes’ voters here would understand the other side of the Sterling coin.

Itsallgoingtobefine…..please understand when mentioning international bond interest rates, I’m not really talking about assuming UK debt, that is currently funded and costs the UK taxpayer over £50 bil in interest alone.

Scotland like any country will need to issue bills and bonds for annual cash management and any deficit spending i.e. large infrastructure spending and a recession.

Unfortunately for iScotland/Salmond the supposedly independent advice from the BoE is that if you want monetary union then both have to sign up to strict conditions. Ie. iScotland would have to be bound by very similar tax/spending policies and underwrite our banks etc. Something which the SNP seem not to want to do.

Now the civil service have also come out against monetary union saying pretty much the same thing and advising the govt directly against it.

It just seems crazy for the rest of UK to risk picking up the tab for iScotland when there's no benefit to us at all.

www.adamsmith.org/news/in-the-news/sams-comments-on-scottish-independence-and-sterling-widely-featured

I never wanted a currency union anyway. Suits me fine to be completely independent.

However even according to Mark Carney, Governor of BoE it would make sense to have a currency union, as we do trade with each other. Difficulty for UK govt is that Scotland could leave this union at any time, make UK govt economy unstable.

Morally, yeah, but if Scotland refuses to take its share of debt,

a) there will be no negotiation over assets
b)the interest rates charged to an independent Scotland would be crippling

put a) and b) together and you have a big problem.

Then issue c) EU membership.

'No debt then' is a shocking position to take.

There's no way iScotland would be admitted to the EU.

iScotland would be a joke internationally, and the interest rates on any loans would be crippling.

HollyHB....there will not be the uses of Sterling, as whatever hair brained financial hocus pocus Scotland adopts (using your examples) will influence Sterling, so lets move on.

So the rest look to me as an Independent Scotland, not actually independent at all, and susceptible to potentially wild currency moves.

You don't mention your views on what international country might be the benchmark for Scottish government bonds, why not, as the currency is only a part of Scotland's capital markets new positioning in the world.

Theresnomewothoutyou……quite the opposite.

Cameron wants the UK to remain intact, the majority of the Conservative Party and people of England do – but the SNP attempt to tell the Scottish people ‘we will get what WE want, despite if it’s right for England’ AFTER you vote ‘yes’, is disingenuous at best.

Cameron and the Conservative Party admittedly have the electoral boundaries stacked again them, resulting in Cameron needing to be several points AHEAD of Labour in the polls, just to get a parliament majority of ONE – so it may appear that it is in their interest for Scottish Independence, than Labour, who only need around 35% of the UK vote to get a parliamentary majority.

But what Osbourne has said, based on the sovereignty and financial lessons of the EU before and after the 2007, makes complete sense both countries.

The ‘one currency and one interest rate, fits all’ within the EU, was always going to be a disaster, as how can the same rates be right for industrialised Germany AND a deck chair economy like Portugal, or a small East European country getting around stone roads via a donkey?

So how can an independent Scottish economy, where Salmond in total control of Scotland’s budget/spending decides to rub English noses into their spending per head even more, and/or gets into huge bank/financial debt - be then expecting to be bailed out by the English parliament and/or Bank of England???

No matter if the Queen of Westminster wants Scotland to say, the English parliament has to look after ENGLISH taxpayers interests, while the Scots do what is best for them.

Scotland should do what it always does, just blame the Conservatives and get on with voting with the FULL facts (of the currency and interest rate issues at least) in front of them.

TheresNoMeWithoutYou > Everything is loaded to piss people off and divide them.

That's about the size of it, there is no real advantage to fiscal union except vote catching. And fiscal union is a separate issue from using the pound and the only reason to conflate the two issues is vote catching (which both sides do).

The real options are:

1. Use of Sterling without monetary union (like Ecuador does with the US Dollar). This is equivalent to an interest-free loan equivalent to the amount of paper money in circulation.
2. Scottish Pound at a maintained par (similar to the Bahamas/USA currency or the postwar Irish Pound). The financial pressure of maintaining par forces you to shadow the interest and tax rates of the other country whether you want to or not.
3. Scottish Pound floating like the Norway Krone. The cost is that, to stay in the EEA, you have to follow most (not all) EU rules but don't get a vote or a say in what the EU rules should be.
4. Scottish pound floating, but not part of the European Free Trade Area. You don't have to follow EU rules but you do face huge tariff barriers.
5. Adopt the Euro and join the Eurozone as a fully-fledged EU member.

Those are the options. It's impossible to have monetary union with a country that doesn't want monetary union.

What I am taking from camerons campaign is that he is wanting rid of Scotland whilst pretending otherwise. Everything is loaded to piss people off and divide them. Its not about unity at all. The intelligence of those running the campaigns (both sides) is denying us fair information and good debate.

Niceguy2…the truth about the truths, is apparently that NO ONE knows, and that is scary.

Here is a post I prepared earlier.

So all three main UK political parties insist that an Independent Scotland will have it’s own currency and control it’s own interest rates, rather than have interest rates set by the BoE, where similar to the problems of a ‘one rate fits all’ EU, what might be right for England, may not be right for Scotland – which could lead to restrictive, or overly loose money e.g. inflation.

And this also right for the UK, as if Scotland, used to spending more money per head that the UK (see below), gets itself in trouble, it needs to sort itself out.

What I’ll add is that if we get into some asset/liability bun fight with Scotland, I’d suggest versus the oil argument that Scotland funded the exploration and continual cost of lifting (a-hem), if they were not under the BoE financial umbrella for decades, where would there interest rates have been?

And could the UK Treasury make a claim for the difference for that financial umbrella?

And my evidence of this potential Scottish Liability is if you look at any of the non core EU countries interest rates BEFORE they joined the EU and financial umbrella of the European Central Bank i.e. Ireland, Greece, Portugal and Spain (never mind the smaller East Europeans), they were SUBSTANTIALLY higher than after they joined.

Moving on from here, Scotland now needs to figure out, with all the theoretical benefits of financial independence, where they can decide the exchange rate of the Scottish Groat, and what interest rate is neither too stimlautive or loose for its OWN economy – where the markets would price Scottish interest rates on the international markets e.g. for Scottish government bonds, and decide Scottish domestic rates from there IMO.

It's incredibly hard to know who is telling the 'truth'. I suspect it's more a case of lies, damn lies and statistics most of the time.

However there are two things I'm finding hard to swallow with the Yes campaign.

1. If you want independence why retain the pound? How can you possibly seek to be independent yet tie yourself to the country you just divorced economically with the same currency?

It's a bit like a wife divorcing her husband but wanting to keep the same shared bank account with each putting their money in. It's just going to end in disaster isn't it?

2. The yes campaign seems to be cherry picking the bits they want and ignoring the bits they don't want. So for example we'll divorce, keep the pound but let's not talk about the obligations we'd have to agree to. We'll join the EU but not the Euro even though it's a condition of joining.

Right now they are campaigning based on nationalism. Heart over reality. And anyone suggesting that in reality there will be problems is portrayed as negative campaigning and bullying from Westminster.

And this is the bit that REALLY upsets me, when Salmond brags about Scottish services re Englands.

The extra level of funding per head that Scotland receives has grown from £828 in 1999 to £1,644. In 1999 the state spent £4,993 per head in Scotland and £4,165 in England. Now Scotland receives £9,179 and England gets £7,535.

As we found with Brown, any Scottish fool of a politician can either spend more money, or money the State can't afford, for electoral gain.

Much of Scotland’s higher spending per head may not have been financed DIRECTLY by oil, but you ain’t done too badly for voting Labour.

www.martinfrost.ws/htmlfiles/scotnews09/090112-cuba.html

Scotland on a par with Cuba for state largesse
Jason Allardyce January 11, 2009

"Welcome to McCuba. Scotland is set to become the third most state-dependent country in the world. Soon Havana and Baghdad will be the only capitals that rely more on public spending than Edinburgh, according to economic forecasters.

They say the uneven flow of government funds to north of the border is putting an “unfair burden” on English taxpayers. They predict that public spending will soon rise to the equivalent of almost 70% of Scotland’s gross domestic product.

The forecasters — from the Centre for Economic and Business Research (CEBR), a consultancy that advises the UK government — warn in a report that the burgeoning Scottish public sector is “unsustainable”.

*The CEBR paper, commissioned by The Sunday Times, shows that the annual public sector wage bill in Scotland has risen by 55% to £12 billion since the Scottish parliament was established in 1999, with nearly one in four working for the state. A further £2.3 billion is spent annually on pensions for public sector workers, whose ranks have grown by nearly 50,000 in the past 10 years.

The report will renew concerns among English taxpayers about the preferential treatment enjoyed by the Scots, who benefit from free personal care for the elderly, no tuition fees and free school meals.

The extra level of funding per head that Scotland receives has grown from £828 in 1999 to £1,644. In 1999 the state spent £4,993 per head in Scotland and £4,165 in England. Now Scotland receives £9,179 and England gets £7,535.*

Last year public spending was the equivalent of 43% of GDP in England and 56% in Scotland, placing Scotland 20th on a table of 160 countries most dependent on state spending, and England 67th.

The CEBR forecasts that the Scottish figure will rise to 67% by 2012-3, while the UK will rise to 48%. This would place Scotland in third place in the league of countries most dependent on state spending.

John Blundell, director-general of the Institute of Economic Affairs, said: “Scotland has been heading this way for an awfully long time. Adam Smith must be rolling in his grave.

“My impression is very much that Scotland got into a vicious circle of creating more and more benefits and more government jobs"

Isn't that what happened to Greece; why should England underwrite Scotland's policies now and future spending, later?