Scottish Indyref 2

[auckleyflyer]

25yrs for me. No one says a time scale but to me a decision as complex and divisive as this need to rest no matter how close the results.
Quarter of a century. It's that disruptive.

[Herbert Anchovy]

If Scotland did eventually leave the union, what would their currency be?

[Bentley Bullet]

Shortbread.

[Herbert Anchovy]

Shortbread.

I’ll move there then...

[BillyStubbsTears]

If Scotland did eventually leave the union, what would their currency be?

That's the $64,000 question.

They have two choices. Both come with massive problems and the SNP have assiduously and consistently lied to the Scottish people in playing down those problems. The core of the problem is that Scotland runs a massive structural budget deficit. "Structural" means that they don't just borrow money to underpin the economy when times are tough, as all Governments should do. It means they are borrowing hugely even when the economy is running well. In simple terms, they live massively beyond their means.

They get away with that as part of the UK because they are a small part of a large overall economy. The UK as  awhole can borrow to cover that debt on terms that Scotland on its own could not. Once they leave the UK, they run into two potential brick walls.

1) Have their own currency. This means they have to finance their own deficit and debt. Which means issuing bonds in the new Scottish "Thistle" currency. But running a structural budget deficit of 5-6% means that their currency would lose value rapidly against other currencies. And the consequence of your currency devaluing is that your export costs rocket up, hugely lifting inflation.

2) Be part of a bigger collective currency, the Pound or Euro. If independent Scotland was part of a bigger currency, they wouldn't have the option of devaluing the currency. That decision would be made in Frankfurt or London and Scotland would have a tiny input on that. And then here comes the rub. We saw in the Euro crisis in 2011 that any country that needed to borrow to finance debt but didn't have control of its own currency, saw the interest rate on their borrowing rocket up. Greece, Italy, Spain, Portugal, Ireland all saw cripplingly high interest rates which devastated their economies. The answer to that in all thei cases was appalling levels of Austerity to squash down Govt spending and get their debt under control.

So whichever way you look at it, Independent Scotland cannot continue to run the levels of public spending and debt that it currently does. That results in either crippling inflation or crippling interest rates. It is an utter disgrace that the SNP never, ever engage in that discussion. They would lead the Scottish people into an economic disaster, to satisfy their Braveheart myth.

[belton rover]

Shortbread.

I’ll move there then...

Gold Mcnuggets

[Metalmicky]

Shortbread.

If it were square sausage, white puddings and haggis.... I'd be investing...!!

[big fat yorkshire pudding]

In many ways the American solution should be the answer for Scotland. A federal approach where they control lots of things but remain part of some union where economic and defence policies are taken at that federal level.  That is independence in all but name.

The problem is the EU.  If they really want to be part of the EU rather than GB then they have to make that choice.  Much of that is nothing to do with what Europe gives but an anti English approach.

[Bentley Bullet]

Let them go alone, in twelve months they'll be wanting to lynch Wee Jimmy.

[drfchound]

BB, my nephew is a bricklayer and he is hoping that the Scots do go it alone.
That wall up there needs plenty of patching up and he is hoping to put a price in for the job.
He should have a good chance of getting it because he votes Tory.

[BillyStubbsTears]

I've said all along that the SNP were massively lucky to lose the 2014 vote. They based their economic plans on the basis that oil would never again drop below $120/barrel. Within 6 months of the referendum, oil was down to $40/barrel. If they had gone for independence, Scotland would have been bankrupt before they started and there would have been riots on the streets.

Instead they lost and the SNP just became more popular. It truly is a bizarre turn of events.

[Ldr]

BB, my nephew is a bricklayer and he is hoping that the Scots do go it alone.
That wall up there needs plenty of patching up and he is hoping to put a price in fo4 the job.
He should have a good chance of getting it because he votes Tory.

Don't exile me the wrong side of the border mate, that there wall is a couple of miles south of me

[Bentley Bullet]

BB, my nephew is a bricklayer and he is hoping that the Scots do go it alone.
That wall up there needs plenty of patching up and he is hoping to put a price in fo4 the job.
He should have a good chance of getting it because he votes Tory.

Wouldn't Starmer claim that to be borderline criminal?

[drfchound]

BB, my nephew is a bricklayer and he is hoping that the Scots do go it alone.
That wall up there needs plenty of patching up and he is hoping to put a price in fo4 the job.
He should have a good chance of getting it because he votes Tory.

Don't exile me the wrong side of the border mate, that there wall is a couple of miles south of me

I know, I have been up there plenty of times.

[SydneyRover]

Yep I've heard you're a bit of a traveller

[big fat yorkshire pudding]

I've said all along that the SNP were massively lucky to lose the 2014 vote. They based their economic plans on the basis that oil would never again drop below $120/barrel. Within 6 months of the referendum, oil was down to $40/barrel. If they had gone for independence, Scotland would have been bankrupt before they started and there would have been riots on the streets.

Instead they lost and the SNP just became more popular. It truly is a bizarre turn of events.

It's much like brexit though isn't it. A positive message will always beat a negative one. The snp are clever in deflecting all blame and creating a positive image that nothing is their fault even if is.

How can that be prevented? It's very tough. Give Scotland more funds the snp take the credit.  Reduce any funds they blame Westminster.  Every year they rubbish the economic gers calculations that are produced by their own government.

This line sums up what you say very well...

"The difference in the change in the overall net fiscal balance between Scotland and the UK is explained by falling North Sea revenue in 2019-20. Excluding North Sea revenue, the net fiscal balance for Scotland increased by 0.6 percentage points, the same as the UK. The net fiscal balance excluding North Sea revenue tends to move in line with the figure for the UK, but is typically around 7 percentage points weaker."

Quite clear in there that Scotland can't pay its way yet they still deny it.

[albie]

i would not make any economic predictions based upon how the dependent economy functioned, even in the recent past.

The same sort of arguments were used when small countries departed the former Soviet bloc, and they proved pessimistic.

The currency question falls into the same category error.
Central banks across the world will move to cryptocurrency within the next few years. Plans are already in place to institute and accelerate this. In a world where financial transactions are increasingly borderless, the need for protections required by the old system recede.

No-one is going to base national financial planning on the same metrics that applied in 2014. If the SNP did so, they would be very foolish.

It will be interesting to see how they pitch this, because in 2014 they were saying that they would stay with sterling....that is not independence, and it will be irrelevant anyway by 2025.

[Metalmicky]

It will be interesting to see how they pitch this, because in 2014 they were saying that they would stay with sterling....that is not independence, and it will be irrelevant anyway by 2025.

Quite right albie and I doubt we will find out this detail anytime soon...

As others have said, will the EU want them and their budget deficit, will Spain vote against them entering etc etc..... it's unlikely that we will get any meat on the bone for some time.

[BillyStubbsTears]

Albie

Are you saying the whole concept of how central banks operate is about to be turned over? I think I missed that memo.

Your post is a perfect example of how folk try to obscure the simple macroeconomic argument against Scottish independence. Fairy stories about how "everything is going to be different" as though the basic mechanisms of economics no longer apply.

Nationalistic political ambitions put before black and white economics. Precisely what the Leave campaign did.

[normal rules]

If Scotland did eventually leave the union, what would their currency be?

Haggis?

If they got independence, re joining the Eu would be the SNP’ s next target. So it would be the Euro surely?

[Herbert Anchovy]

If Scotland did eventually leave the union, what would their currency be?

Haggis?

If they got independence, re joining the Eu would be the SNP’ s next target. So it would be the Euro surely?

Maybe, but what would it be before they join the EU? Also, I’d imagine that give the levels public spending and debt in Scotland they wouldn’t be a particularly attractive proposition to the EU? Although I’m just guessing here- I don’t really have a clue.

[albie]

Albie

Are you saying the whole concept of how central banks operate is about to be turned over? I think I missed that memo.

Your post is a perfect example of how folk try to obscure the simple macroeconomic argument against Scottish independence. Fairy stories about how "everything is going to be different" as though the basic mechanisms of economics no longer apply.

Nationalistic political ambitions put before black and white economics. Precisely what the Leave campaign did.

BST,

Yes, I am saying that....and so is every Central Bank in the developed world;
https://www.bankofengland.co.uk/news/2021/april/bank-of-england-statement-on-central-bank-digital-currency

The IMF, the Federal Reserve, China...all going down this route.

If you want to stay in the retro field of macro economics from Keynesian principles, fair enough...but it is not the way the international economy will function.

This is important, but seldom discussed in the MSM.
Fundamental implications for the evolution of political dialogue in the slipstream.

Here is a primer with video links if you are behind the curve;
https://dci.mit.edu/cbdc-central-bank-digital-currency

[BillyStubbsTears]

Albie

Go on then. In what way does a move to digital currency change the fundamentals of what a Central Bank does? How  does it change the basics of fiscal policy? How does the creation of a digital currency allow a country running a massive structural deficit to borrow at anything less than punitive rates if they are using a shared currency, or to avoid devaluation if they are using their own?

[albie]

BST,

Central Banks are acting to avoid being supplanted by the digital currencies currently being worked up by Facebook and Amazon among others.

Private sector DC can undermine the fractional banking sector with clear implications for economic development options. They may also reduce the tax capabilities of Central Banks that cannot compete with their offer.

National fiat currencies are under threat of imminent reform, and how that plays out will set the frame for future economic strategies. Lagarde has been on at this for 5 years at least.

All this is well understand in the financial community. Lots of work in the academic field if you want to look.

The relevance to Scotland is that the currency options are no longer restricted to those you set out above.

I would expect any policy position from the SNP regarding a future ref to hold this in mind.
Your other questions are not to the point, until we have a clear emergent position.

A taster;
https://youtu.be/fpb-qJv6dBs
FF to 8 mins if you want to miss the long winded intro.

[SydneyRover]

Blockchain international money transfer is relatively new and cheaper than banks, and easy to use.

[Bentley Bullet]

I see Starmer's hopes of unity haven't kicked in yet!

[SydneyRover]

''Angela Rayner, who was locked in a dispute with Sir Keir over her role in the party at the weekend, told the BBC the two had "robust conversations".

However, she also said she believed in him "100% because I wouldn't still be working with him if I didn't."

She said the party now had to "connect with voters we've lost".''

[BillyStubbsTears]

Albie.

The fact that Scotland has a massive structural fiscal deficit means that its Govt consumes far more than it earns. In simple terms, Scotland cannot afford to pay for its schools, hospitals and bin collections without massive borrowing.

That fact doesn't change, whether they use Pounds, Euros, digital currency or south Pacific conch shells as a means of exchange. Independent Scotland is faced with either massive spending cuts or the realisation that their currency is worth a damn sight less in the eyes of the world than the Pound is now.

No cryptocurrency magics that away. Anyone claiming it does is misleading the Scottish public for political ends. And we've had far too much of that sort of smoke and mirrors this past 5 years.

[Metalmicky]

Albie.

The fact that Scotland has a massive structural fiscal deficit means that its Govt consumes far more than it earns. In simple terms, Scotland cannot afford to pay for its schools, hospitals and bin collections without massive borrowing.

That fact doesn't change, whether they use Pounds, Euros, digital currency or south Pacific conch shells as a means of exchange. Independent Scotland is faced with either massive spending cuts or the realisation that their currency is worth a damn sight less in the eyes of the world than the Pound is now.

But they may be able to tap in to a flourishing Euro though......... a problem shared and all that.

[BillyStubbsTears]

MM.
I get that was a joke but this is serious. They would absolutely have to slash public spending if they took on the Euro, because they (like Greece) would not be able to borrow at anything less than frighteningly high interest rates.