Posted on June 11th, 2016
By Rab Bruce’s Spider
I was disappointed to hear that Nicola Sturgeon has announced an independent Scotland would continue to use Sterling. I have long advocated the creation of a Scottish Pound as a separate currency and, with the currency issue perceived as the Yes campaign’s Achilles’ Heel during the IndieRef, my initial reaction was to ask, “Has she learned nothing?".
I believe an independent Scotland would suffer by clinging to the currency of a country which has cut itself off from the EU and which clings stubbornly to Austerity Economics despite the mounting evidence of the harm this does. In my view, Sterling will lose a significant percentage of its value if the UK leaves the EU and I see little value in Scotland continuing to use a shunned currency. In economic terms, the only benefit would be that our exports of whisky, beef, salmon and oil would be relatively cheap for other countries to purchase and there may be a slight boost to tourism. The downside is that it would take longer to build up reserves of foreign currency because those purchasing our goods would require less of their currency to do so. In addition, the cost of our imports would be higher than at present. Thirdly, a falling Pound would put pressure on the Bank of England to raise interest rates, with a potentially devastating impact on anyone with a mortgage and a knock-on effect on the overall economy
So why declare sterling as the preferred option?
After some reflection, I think I understand the motivation behind this. At one level, it means Nicola Sturgeon is seen to support the stance held by Alex Salmond when he was First Minister but the principal reason must surely be to allay the fears of the great many Scots who demonstrated their worries about any sort of change. Switching to a new currency, while not that difficult in practice, would trigger alarm bells and give the Unionists an easy target for scaring the elderly and anxious.
To be fair, creating an independent state, even if we already have many of the institutions and societal infrastructure in place, is a big enough task without needing to constantly fend off attacks over a new currency.
Then there is the need to focus on one thing at a time. It is the EURef which currently dominates and discussing a hypothetical change of currency after a Yes vote in a second IndieRef which might not take place anyway, is a waste of time.
But let’s hope that, if and when there is a second IndieRef and we get the vote Scotland needs and deserves, the use of Sterling as a currency will be relatively short-lived. Once things settle down and the fearties start to realise that things are not so bad after all, we can start laying the plans for a separate currency which would give us full control of one of the major levers of the economy.