by Hazel Lewry
Sometimes it is useful to look forward and anticipate rather than live in the present or simply reference the past. Looking forward just a little reveals some startling issues and events in potentia.
The year is 2015, Scotland has voted to effectively repeal the act of Union with England. She had no choice, it was thrive without or bankruptcy within. The economic argument created a landslide.
An ironclad act is passed as a constitutional bill at Holyrood, it requires that all ties between Scotland and England are dissolved by 2018. The clock is in many ways set back 300 plus years. All successive governments can do is to negotiate appropriate treaties with our neighbour and put these to the people if they contain any significant aspects of Scottish sovereignty.
The wrangling starts: who owns what of the old UK, which assets go where, how will the debts and obligations be divided?
Scotland takes the perspective that she has been a net contributor over the term of the Union, and should take no debt, but is willing to accept a per-capita share of outstanding obligations, perhaps 8% of the two trillion pounds presently disclosed, though that may only be half the real number.
That’s about £32,000 for every man, woman and embryo in Scotland, this for a nation in surplus.
It amounts to a parting gift to England of about £160 billion pounds, or over five years worth of Scotland’s annual block grant.
With interest you should expect to personally write the future English government a cheque for around £50,000 for every individual in your household. The good news is they will give you time to pay. That figure is increasing daily.
Scotland, a nation in surplus, can service this debt. It will be painful, but serviceable. The question many will ask, and a future government will undoubtedly be elected upon, is why should we service it?
Scotland is at least in a position to end the debt debacle; she has the means and resources to do so, given time. The rump UK does not.
The rump UK of Wales/England/Northern Ireland would likely fragment quickly. It may once again become independent nations under Welsh, English and Irish banners. Would the Northern Irish join again with the Republic? That remains to be seen. Certainly there would be no UK to retain their loyalties.
The impact within these nations would be nothing to the external impact.
Expect the Scottish finger to push that first domino in the world financial system over, the resultant collateral damage would in all likelihood bring chaos to the world currency markets before a new order rises from the ashes.
Scotland of herself simply doesn’t hold that much influence, but the former UK as an indebted state does. The most recently declared debt load of the UK makes those of Ireland, Iceland, Greece, Spain, Portugal or Italy seem very inconsequential, and the global financial community is using every effort to stem its losses and negate the fallout there.
The problem is that the future England is bankrupt. She has no way of staving off the fiscal catastrophe approaching with a “Yes” vote in a Scottish referendum. Ditto, to a lesser extent, Wales and Northern Ireland. If history repeats the future England will also have no way of stopping a “Yes” vote in the Scottish referendum.
Clearly the Union argument that “We are stronger together” is a valid argument, but only from England’s perspective. It is like the sword with two edges for Scotland, for while England must have Scotland, Scotland is demonstrably fiscally much better off outwith the Union than within it.
Basically a vote to remain in the Union at the referendum is minimally shaping up as:
- A vote for austerity
- A vote for a debasing currency
- A vote for fee-based education
- A vote for a fee-based National Health Service
- A vote for higher taxes
- A vote for reduced services.
- A vote for an increased retirement age
- A vote for reduced benefits
The bankers who hold the marks of UK debt are already demanding payment.
To maintain solvency, even in the short term, these payment issues must be addressed. The majority have already been legislated in England and Wales with the above bulleted service cuts and tax increases. This is “austerity”.
This legislation which does not affect Scotland, is causing rumblings of disquiet south of the Border, therefore ways must and will be found to inflict the same pain level north of it.
The easiest way is to legislate a lower block grant, whether by an act of the Westminster parliament or by “formula” the effect will be the same. The pain will spread north. The disquiet in the south will drop again to the odd murmuring.
Westminster doesn’t learn. Even as taxes persuaded 13 American colonies to rebel through force of arms, they are likely to force Scotland to perform likewise at the ballot box.
So we’re back to the “Yes” vote having gone through in a landslide by around 2015.
The UK is dead. Long live the re-constituted nations, either as two or four. This will not be the perspective of the global banking community.
In the referendum run up the global banking community will re-assess the rump UK, quickly understanding its debts are not quite as solid as it had believed, or even shakier than thought.
The UK has no oil to back these debts. Effectively the UK is a political construct of a treaty signed in 1707, that treaty did not provide for its dissolution, therefore any outcome is on the table at the time of dissolution.
If the constituent nations so choose, the UK can quickly become a penniless, worthless, deceased political construct. In time the newly independent nations would likely benefit. Vested interest and the international community of financiers will not.
The global banking community amongst others will fight, and fight hard, against the demise of the UK.
It is not beyond credence that rather than pay the debt shares of the former UK allocated to it that England would realize its fiscal position was untenable and would default. It is highly likely as it will have no other presently foreseeable option – as England [PLC] at a minimum it would require “restructuring”.
England may become Greece ad infinitum. England has little manufacturing base remaining. England primarily shuffles paper. England defaulting on her debts is potentially the most likely future scenario. England’s balance sheet is worse than Greece in relative terms.
If default works for England, what then will be the attitude of Greece, Italy, Ireland, Portugal, Spain and others? The shoogly pegs will likely find it easier to fall. The populations might well demand it.
Scotland may also opt to the take the view that as she was a net contributor to the old UK, that the debts should not devolve onto her resources. The creditors would call in their marks – fruitlessly. The sham of a “single” United Kingdom being one nation would again be fatally exposed.
International banking will “take a bath”. They cannot collect from that which no longer exists. The situation would be little different if the nations chose than a creditor trying to collect from a penniless corpse. They, the creditors, will probably only be asked to contribute to the funeral by the undertaker.
The stunning aspect is that it presently appears there are only two real options on the table for England, fiscal demise within the UK or fiscal demise as an independent nation. Scotland has an option to make it on her own. She can sink with a “No” or swim with a “Yes”. Taxes will make the decision clear.
The only interim possibility for Westminster then is to call what is happening in Scotland “Devolution”, not “Resumption” or “Restoration” which in actuality it is. Westminster must “fight for the preservation of the UK”. As long as the “Devolution” lie can be propagandized and expounded, the English might not realize that they are apparently disenfranchised and bankrupt.
Uncounted “private” funds will be thrown at a “NO” vote. Obfuscation will be the rule of the day. Scots, or many of us, will vote with our wallets and our children will benefit. The “No” campaign should fail.
Westminster can then pray for some sort of fiscal miracle as came along in the 1970s with the advent of Scottish oil. Having been squandered the first time it is not so likely lady luck will smile there again.
By the end of the decade the world banking system could be on a very shoogly peg indeed, the only question that remains is how that system will ultimately react.
In the interim, the English public and the global community has apparently accepted the propaganda fed to them by Westminster, almost without question. This is an outcome of which even history’s best propagandist manipulators could have only dreamed.