By Colin Fox
There is a perfectly sensible debate to be had over what currency an independent Scotland should use but as usual the No side prefers to invent scare stories and deliver empty threats. George Osborne’s visit to Edinburgh’s Point Hotel on 13 February to tell Scotland that “leaving the UK means leaving the pound” is a case in point.
Many people were understandably angered by the Tory Chancellor’s latest foray North of the Border and asked how he had the gall to come up and dictate what currency Scotland could or could not use after independence? ‘That will be our decision, and ours alone’ was the widespread riposte.
And they had a point, after all it is Scotland’s pound as much as anyone’s – and has been for 300 years – and there is nothing George Osborne or Ed Balls or Danny Alexander can do to stop us using it.
For its part, the SNP Government accused the unholy Unionist trinity – Osborne, Balls and Alexander – of “bluffing” and insisted the Sterling Zone remained its preferred option in the post-referendum negotiations that will decide the issue one way or the other.
And there are, it’s true, several advantages for both Scotland and the rest of the UK in employing this option in the short term It could provide a certain level of economic stability and certainty during the important 16 month period allocated to negotiating the transition to full Independence for Scotland.
But before we come to that it is worth reflecting on what prompted Osborne’s U-turn after 18 months prevaricating over the UK Governments attitude to a Sterling Zone?
The Unionist side clearly felt this issue was a potential ‘trump card’ for them in the referendum debate and they had waited and waited until deploying it. So why now?
Why not continue to prevaricate on their response until say September when it could have been much more difficult for the Yes campaign to effectively rebut their charge?
Could it be that Better Together were rattled by the three consecutive opinion polls published in January each registering a 5 per cent rise in support for the Yes campaign?
Because Osborne’s latest rare foray north of the Border was certainly a gamble. He knows fine well how unpopular such Tory visits are here. And he is also well aware that there is nothing he can do to stop us using the pound if we wish to.
But his case was not economic or monetary, it was political. His announcement was timed and designed to unsettle those ‘don’t knows’ moving to Yes and to imply that a major plank of the Independence strategy was now closed off. It is also worth remembering that Osborne and his neoliberal Unionist colleagues in the Labour Party and Lib Dems oppose all four of the currency options outlined by the highly respected Fiscal Commission.
Their options – keeping the pound as part of a Sterling Zone, keeping the pound and using it unofficially, joining the Euro or establishing our own currency – each carry pros and cons.
The choice is therefore a political one as much as it is monetary or economic. The No campaign argues that the other three options are equally unpalatable and unworkable but are determined to extract a Plan- B from ‘Team Salmond’ as they describe the Yes campaign.
The SNP Government’s preference remains for a Sterling Zone where Scotland shares the pound with the rest of the UK and has a seat on the Bank of England’s Board. But increasingly this is seen by many Yes supporters as at best a transitional arrangement to provide a stable trading environment until a new Scots currency can be fully established.
The SSP accepts Scotland can continue to use the pound as long as we like, with or without the r-UK Governments approval. But we also recognise that using Sterling, officially or unofficially, means we have no control over interest rates, borrowing levels or the pounds international value.
So whilst a Sterling Zone may have short term attractions in providing an element of transitional stability for a newly Independent Scottish economy we need our own Scottish currency if we are to have full monetary and fiscal sovereignty in the long term.
But the debate over currency must not obscure the fact that the opportunity to free ourselves from the neoliberal straitjacket imposed on us by The City of London, Whitehall, Westminster and the Bank of England lies at the heart of this debate.
Control over our currency, as well as our monetary and fiscal policy is vital if we are to address the outrageous economic, financial and social inequalities in Scotland today. That is why this debate on the currency is not some esoteric discussion. It is central to the economic, monetary, fiscal and above all political power we need to build our progressive new nation.
Courtesy of The Scottish Socialist Voice