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Scarlett Nation » Economics » When Independence Is Not Independence

When Independence Is Not Independence

Last week, I sat down to watch EastEnders. Masood and Zainab’s relationship continued on its downward spiral, with the two of them eventually deciding that their marriage wasn’t going to work. In the argument, Zainab was tossing around their possessions and shouted in this exasperated manner “Thirty years! How do we untangle thirty years?!”.

And so naturally, because this is me we’re talking about, this made me think about the SNP and the upcoming referendum on Scottish Independence. Except we’re out by a factor of ten: 300 years! How do we untangle 300 years?!

An initial disclaimer – I am English.

Outside of the obvious questions, like who is the legal owner of North Sea Oil or where do the nukes go, FM Salmond’s proposals bother me with regards to his wish to have his cake and eat it.

According to Salmond, an independent Scotland would keep the Queen and the Pound. The Queen isn’t a problem (although polls show slightly higher rates of Republicanism north of the border) but the assertion that Scotland would keep the pound is a major one. “We will keep the pound” is the SNP saying “We will hand over control of monetary policy to another country”. And if the Eurozone crisis has shown us anything, it’s that in practice you have no independence with monetary union. Should England/Wales/NI (EWNI? UK-? Do we even have a name decided yet?) or Scotland suffer economically independently of one another, the responsibility of managing money will lie with the Bank of England – whose chair is appointed by the EWNI government and therefore has the mandate to protect the interests of EWNI. UK governments of either hue have rejected joining the Euro for this precise reason – no government wants the headache of separating fiscal and monetary control across borders. A Scotland that keeps the pound is not independent; a deal would have to be struck on acceptable levels of inflation and so on. But of course, even when these deals are struck, as they were by the European economies prior to joining the Euro, they are effectively meaningless as the ECB has found to its detriment.

A Scottish referendum on an independent Scotland that keeps the pound is giving Scottish voters the ability to force EWNI to enter a monetary union with a fiscally independent state, without the necessary consent of the people of EWNI. As someone who would demand a referendum before any attempt to join the Eurozone, the idea that we could accidentally end up in a similar situation without even being asked makes me about as angry as someone with pink shampoo in their water feature.

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  • Leighton

    Don’t worry, from our perspective as The English, it doesn’t matter, because our economy is bigger than theirs. It’s analogous to when Argentina pegged it’s currency to the US dollar to prevent hyperinflation during the 90s.