Why would an independent Scotland expect a currency union with the UK?

[JapaneseMargaret]

I mean, I can see why they would, but doesn't that just totally undermine their desire for independence?

Am I missing something blindingly obvious...?

Independence vote will never go away, there will be vote after vote after vote for years and years. This way nationalist scots will feel they are doing something about it, while enjoying the benefits of the union.

I would think that the possibility of a repeat vote will depend on how close it is and also where the money is coming from to fund the voting process.

It's an emotional decision, but there are practicalities to be worked out. In the long run, an independent Scotland would probably want to be a member of the EU and the Eurozone. How to get there from here is a question that has not yet been answered.

An interesting piece on the BBC this evening, polls are showing little movement in Scotland or elsewhere in the UK.

The number in favour of independence within Scotland has increased by no more than a couple of percent within the past few weeks, with the number against still at just over fifty percent (about twenty percent undecided). Within the rest of the UK, only about a quarter are in favour of a currency union with an independent Scotland.

OberonTheHopeful

That's my point really, the 'yes' campaign keep saying it's in the interests of rUK, but that just doesn't seem to be true. Their campaign seems to be predicated on a number of assumptions (EU membership would be another one) that may not be true, with no published alternative plans. It seems a bit half baked!

Half baked? It hasn't even been proved yet.

Euphemia

Elderberri I disagree - if it's "No" this time, that'll kill the question of independence for decades. After all the build-up, I just don't believe people will have the appetite for going through the whole thing again.

If it's a no vote this time, the yessers will simply blame The Sassenachs for ruining their glorious freedom and hints will be made of a big evil conspiracy all funded by Big England.

OberontheHopeful-

1. the UK is Scotland's principal trading partner accounting for 2/3 of exports in 2011, whilst figures cited by HM Treasury suggest that Scotland is the UK's second largest trading partner with exports to Scotland greater than to Brazil, South Africa, Russia, India, China and Japan put together

1. there is clear evidence of companies operating in Scotland and the UK with complex cross-border supply chains

1. a high degree of labour mobility - helped by transport links, culture and language

1. on key measurements of an optimal currency area, the Scottish and UK economies score well - for example, similar levels of productivity

1. evidence of economic cycles shows that while there have been periods of temporary divergence, there is a relatively high degree of synchronicity in short-term economic trends

I am a no, btw. This was in the White Paper.

if the people who live in England don't want to enter into a currency union, no-one is going to make them.

The UK dabbled with the euro and worked out that it wasn't going to work (pity Greece etc didn't do the same really) - why on earth would they want to link the currency with a different country instead?

I have to say I don't really understand why it would be in the UK's interests to form a currency union with a separate nation, act as their lender of last resort etc. I also don't understand how it would be sensible to do this unless a common fiscal policy were in place across both nations. And if you have a common fiscal policy, what's wrong with the current situation?

Equally on the 'no assets, no debt' argument: obviously if Scotland were to leave the Union, they would take a share of the Bank of England's reserves. In that sense they would absolutely get some 'assets'. This is a totally separate issue from whether or not (or on what terms) they get to keep sterling as a currency. Sterling is not an 'asset' in and of itself, it's a currency in which assets can be counted. No-one's quibbling that Scotland would get its share of the Bank of England's assets, or even that they can keep those assets in sterling if they want to - just whether they will get any say in the management of sterling - the currency - after independence (they won't).

They are basically saying that if they can't carry on having a say in how sterling is managed, once they've left the union for which sterling is the currency, they will default on their debts. This seems unwise to me, as it will mean - having abandoned the BoE as lender of last resort - that they then make themselves a credit pariah around the world and thus push interest rates on any subsequent debts sky-high. And natural resources or no, all governments need to borrow.

It's a bit like saying 'OK, well if you're going to ask me to stop turning up and trying to have dinner at this member's club I'm no longer a member of, I'm going to trash the place and cut up all my credit cards and get in trouble with the police, so nyer." And then looking surprised when their application to join other clubs is turned down. It doesn't make sense.

Oh and FWIW I don't really care whether Scotland leaves or not. In some ways I'd like to see it happen, just because I'm curious to know what would happen. I'm just morbidly fascinated by the debate, as so much of it seems just a bit nuts

Completely agree, Manatee, what a great post.

I have been genuinely horrified/ surprised by people saying 'George Osbourne saying we can't have the pound made us want to vote yes,' as if to spite him. It's so childish and petulant, 'we don't like being told what to do'. What a truly great basis to build a new state on.

How long ago was it that the Independence scheme was to dump the pound and go for the Euro?

2009 rings a bell.

I agree that the case hasn't been 'proven', but the only way of truly doing so would be in the event of Scottish independence. It seems an awful risk to take based on so many assumptions.

rUK is Scotland's largest export market, and one of rUK's largest (IIRC Germany just gets in ahead, though it shifts year by year), but then that represents around 60% of Scottish exports yet only around 10% of rUK exports.

There are cross border supply issues with all sorts of nations, including Germany (I work for a German company) and these haven't proven at all insurmountable. Yes, there would be exchange costs but these tend to amount to a very small percentage of GDP. These issues, and labour mobility, are made easier (and less expensive) by a free trade agreement. This can exist without a currency union (and currently does, between the UK and EU).

The biggest issue for many isn't about an optimal currency area, but about the underwriting by rUK of Scottish public debt and bank liabilities that is a consequence of currency union. I believe that the three main UK parties are right to assume that there is little public appetite for this.

I would certainly wish Scotland well if they choose independence, but I do believe that the plans, as presented, assume too much, with little or no contingency if those assumptions turn out to be incorrect. Complaining of 'bullying', and describing the EU Commission President as "preposterous", doesn't strike me as a reasoned argument.

ok. So let's assume Scotland gains independence. They continue to use the pound but they're not in the EU. Membership could take years.

Would Scotland expect to continue in the free trade market of the EU whilst not a member and possibly never be one?

what if they aren't allowed and are slapped with tariffs?

Oh dear, FannyFifer. I feel you're being ganged up on on this thread....there's not enough Yes! supporters on the thread to balance it out with regards to the currency union being discussed..

I'm a Yes! supporter (still need to get a badge and wear it with pride) and cannot see the issue with Scotland keeping the pound. Why make an issue out of it? David Cameron worried much, what's he worried about? Let Scotland keep the pound as it as much belongs to Scotland as it does to NI, Wales or England. Salmond was right to use the term 'bully' because it drew attention to the fact that all three parties were not willing to negotiate.

If the people who live in England are given their independence, it will be up to them to decide if they want to form a currency union with another independent country.

It appears that they don't want to. Nobody can make them. The offer is not on the table.

IrnBruTheNoo

Oh dear, FannyFifer. I feel you're being ganged up on on this thread....there's not enough Yes! supporters on the thread to balance it out with regards to the currency union being discussed..

I'm a Yes! supporter (still need to get a badge and wear it with pride) and cannot see the issue with Scotland keeping the pound. Why make an issue out of it? David Cameron worried much, what's he worried about? Let Scotland keep the pound as it as much belongs to Scotland as it does to NI, Wales or England. Salmond was right to use the term 'bully' because it drew attention to the fact that all three parties were not willing to negotiate.

You - like so many 'yes' supporters - are either deliberately or accidentally conflating two different things.

The first is Scotland using £Sterling as legal tender in Scotland.

The second is currency union with the UK.

Which are you referring to here?

Both.

Well you need to be clear, because the two are very different things. The first is no problem. The second is a ridiculous conceit. Why on earth would the UK want to be burdened with the immense fiscal drag of a socialist welfare state like Scotland? It would be the same problem that the Eurozone has with Greece.

It's bizarre to try to play the victim card by claiming bullying, too. It's as bizarre as the UK demanding Edinburgh, Scotland refusing and the UK claiming it was being bullied.

Ultimately the scots are making the decision whether to be independent rather than the rest of the UK. Rightly so the English, Welsh and Northen Irish have so say in the referdum. If the scots do decide to break away then it is up to the RUk as much as scotland whether we share the pound.

Being indepedent allows the scots to have the socialist policies that their electorate want. The English electorate want less social welfare. Scotland will become a high tax nation where as low tax polices are popular in England. I can't see how it is possible for a high and a low tax nation to share a currency.

We need a lot of social welfare in Scotland - that's the point! We don't need to be governed from Westminster, it doesn't add up. We need to be making policies in Scotland that relates to the Scottish people, where Holyrood is the hub, not Westminster.

No offence, but unless you live in Scotland you have no idea what issues affect Scottish people in their daily lives.

"It's as bizarre as the UK demanding Edinburgh, Scotland refusing and the UK claiming it was being bullied."

LOL, it's nothing like it, sorry.

Given that Salmond didn't want the pound, it was a mill stone around Scotlands neck, until the euro crash its indicates he doesn't really have a clue what to do
Genuine question, is the rUK better off with or without Scotland