The latest round of “positive campaigning” from the Westminster parties centres again on the currency. It’s clear they’ve decided it’s the SNP’s weak spot, and they want to hammer on it. So now all three of Westminster’s parties of government have declared (or will declare, so the BBC have been briefed) that an independent Scotland would be barred from the SNP’s preferred approach, a formal currency union with the rUK.
On one level this is a trap the SNP have laid for themselves. Their policy has essentially evolved like this: “Yey Euro! No, wait, the Euro’s collapsing. Shit. What shall we do? Well, we could have our own currency. But that sounds scary. What’s the only other option? Keep the pound. Phew. Sounds safe.”
A better approach would clearly have been to say “well, on day one Scotland still continue to use the pound, as is normal when countries achieve independence, and it will be for the Scottish people to decide whether they prefer to move towards an independent currency, either as an end point or as a step towards the Euro, or to seek an ongoing currency union with rUK”. Not least because then the post-2016 Scottish Government would have a specific democratic mandate for a sterling zone if that was indeed the outcome of the election. Fear of uncertainty is why this is off the table. But if you want to know what happens after a future election, you’d better get used to uncertainty for obvious reasons.
Given that formal currency union would require Westminster’s assent, though, today’s stramash was entirely predictable (Jeff saw something similar coming in November 2011, although I disagree with some of his conclusions). Perhaps the SNP genuinely like the sight of Tory/Labour/Lib Dem bullying on this issue. It certainly looks ugly, but I can see Osborne’s logic: like it or not, this announcement does take the SNP’s preferred option off the table. They can’t keep saying “once we’ve had a Yes vote Westminster will have to take Scotland seriously”. Well, they can keep saying it if they wish, but it sounds increasingly ridiculous and practically as petulant as the Westminster parties’ position. Strategically, the Tories are correct to assume that this mess must reduce the chance of a Yes vote, and of course it’s not just them. With all three of the biggest parties at Westminster now publicly opposed to currency union, the SNP are effectively relying on persuading one or more of them changing their mind. Not a solid basis for the last seven months of a referendum campaign.
The reality is that on 24 March 2016, the SNP’s proposed independence day, we absolutely will be using sterling in Scotland’s shops. Our bank accounts will still be denominated in sterling. The pre-dissolution SNP Government has no mandate to change that: it’d be utterly undemocratic to do so prior to the election which kicks off on that day. And then on 7 May 2016, when Scotland wakes up with its first independent government, we’ll still be using sterling no matter what. That government will have had a policy (or policies, if it’s a coalition) on the currency, but the starting point will be the pound in your pocket.
And the basis for the pound in your pocket won’t be a currency union. It can’t be. Even if Westminster were entirely relaxed about it, the SNP don’t have a mandate to establish a currency union in the September 2014-March 2016 interregnum and to tie future Scottish Governments’ hands. We’ll be using the pound like Montenegro uses the Euro, or (as Jeff pointed out) like Cambodia uses the dollar. We won’t have a seat on the Bank of England’s (!) Monetary Policy Committee. Scottish budgets won’t have to go to Westminster for oversight, or vice versa, as formal currency union would require. Nothing will have changed.
At that point, if that new independent Scottish Government has been elected on a platform of pursuing currency union, they can get on and pursue it and hope that the post-2015 rUK Government would support it. The only easy route to co-operation on this would be if Labour somehow managed to win both elections while losing the referendum. But if currency union is sought and rUK Ministers stick to today’s line, there would only be two options for those future Scottish Ministers: the Montenegro way, or the Montenegro way moving towards our own currency like a normal independent state. That way we could manage our affairs without our economy still being skewed towards London and without our fiscal policy still being skewed towards austerity. An independent currency seems almost inevitable, especially in the longer term. Or it would do if the Yes campaign wasn’t bogged down by the SNP’s short-sightedness on this issue. They need to think again or they risk jeopardising the recent progress that’s been made towards a Yes vote.