Is the chancellor right to oppose a currency union if Scotland votes for independence?


Alex Salmond makes a poor Schrodinger. Using his country as the metaphorical cat, he claims that an independent Scotland would use sterling and simultaneously be fiscally and economically independent. In reality, if the box is opened in September, only one of those two circumstances can come about. As opponents of the euro know, you can’t be independent while someone else sets your interest rates and fiscal rules. George Osborne is right to highlight the flaws in Salmond’s quantum politics, calling out the serial inconsistencies in his argument. It’s good politics if you want the “No” side to win. And if, like me, you aren’t that bothered, it’s still the honest route. The chancellor is playing by Salmond’s rules, protecting the interests of England, Wales and Northern Ireland. Why should we absorb the costs and risks incurred by the Scots if they choose to leave us? If they want independence, let them have it. Mark Wallace is executive editor of ConservativeHome.


It doesn’t make sense to categorically rule out sharing the pound. The familiar reason is that Scotland is an important trading partner: 14 per cent of exports for the rest of the UK and 7 per cent of imports. A common currency facilitates that, and also makes the rest of the UK a more attractive investment destination. But there’s a sneakier reason. Mark Carney said that a common currency would only last if each country ceded some economic sovereignty to the other. But does the UK government care if it lasts? In 1993 when Czechoslovakia split, the two parts shared a currency. It collapsed after just one month. The UK government doesn’t need to promise to help the Scots stay in sterling. Let them take their chances. Instead, it should care about sharing debt-servicing costs, and about who defends Scottish banks if they get into trouble, since their customers are mostly south of the border. That’s the biggest issue. (Unless, of course, the banks relocate south anyway.) Richard Holt is regional economist at Capital Economics.

Related articles