The Economic Case for an Independent Scotland

[H_B]

Glad you agree. You won't be posting for a while then.

Perhaps you can outline what I don't understand about a currency union?

[Tibbermoresaint]

You believe that a member of a currency union can operate without constraints.

[H_B]

You believe that a member of a currency union can operate without constraints.

What constraints would be placed on rUK in any currency union with Scotland?

[Tibbermoresaint]

The same constraints placed on any country in any currency union.

[H_B]

The same constraints placed on any country in any currency union.

Such as what?

I want examples.

[MarkoRaj]

What constraints would be placed on rUK in any currency union with Scotland?

What constraints would be placed on Scotland?

[H_B]

What constraints would be placed on Scotland?

It's rude to answer a question, with a question.

[MarkoRaj]

It's rude to answer a question, with a question.

You didn't ask me a question. I'm well aware that as yet no - one would have any idea what sanctions would be placed on rUK in the event of a current union but you seem quite certain that there would only be sanctions for Scotland. I assume you have some evidence for this and would like to see it

[H_B]

You didn't ask me a question. I'm well aware that as yet no - one would have any idea what sanctions would be placed on rUK in the event of a current union but you seem quite certain that there would only be sanctions for Scotland. I assume you have some evidence for this and would like to see it

It's not "sanctions". I don't think anyone has suggested there would be sanctions.

Authors of the report by NIESR have noted however that "to prevent an independent Scotland from being bailed out by the rest of the UK, strict limits on Scottish spending would have to be agreed between the Scottish and British governments."

Note, no similar restriction on rUK spending.

NIESR said that the proposed currency union creates a "moral hazard" as the direction of monetary policy at the BoE would be defined by the larger stakeholders at the central bank. This could result in one party bearing the costs of decisions by another member of the bloc.

In other words, what rUK says goes.

[ayrmad]

It's not "sanctions". I don't think anyone has suggested there would be sanctions.

Authors of the report by NIESR have noted however that "to prevent an independent Scotland from being bailed out by the rest of the UK, strict limits on Scottish spending would have to be agreed between the Scottish and British governments."

Note, no similar restriction on rUK spending.

NIESR said that the proposed currency union creates a "moral hazard" as the direction of monetary policy at the BoE would be defined by the larger stakeholders at the central bank. This could result in one party bearing the costs of decisions by another member of the bloc.

In other words, what rUK says goes.

I take it BoE will be liquidising all our assets that they hold,we could do with them up here rather than keeping them down there as backup.

[HardyBamboo]

It's not "sanctions". I don't think anyone has suggested there would be sanctions.

Authors of the report by NIESR have noted however that "to prevent an independent Scotland from being bailed out by the rest of the UK, strict limits on Scottish spending would have to be agreed between the Scottish and British governments."

Note, no similar restriction on rUK spending.

NIESR said that the proposed currency union creates a "moral hazard" as the direction of monetary policy at the BoE would be defined by the larger stakeholders at the central bank. This could result in one party bearing the costs of decisions by another member of the bloc.

In other words, what rUK says goes.

Scotland has no representation at the moment so some representation would be a bonus & maybe the SG will be able to negotiate a Veto? The NIESR report concentrates a lot on Scotland's economic strength so the "bail out" point is maybe moot? As I have said previously I think the SG will be looking at a Currency Union as a short term thing to "smooth over" the transition to Independence & if they are not I wouldn't agree with their position.

[Ad Lib]

The "Scotland has no representation on the Bank of England's MPC at the moment" thing is complete bunk.

The point is the Bank of England is an instrument of law and accountable to the Westminster Parliament. Carney's decisions are scrutinised by the relevant Westminster Committees, who can compel his appearance, and the criteria and approach the BoE is to take to making decisions about monetary policy are set by Treasury directives and secondary legislation. Scottish MPs can and do form part of that scrutiny process, and Carney is obliged to take into account the impact of decisions on interest rates and QE on the UK economy as a whole, not just London or England.

A currency union involves a complete shake-up of that arrangement. It involves moving monetary institutions into an international structure, accountable to whom it is not yet clear. It is hard to see how, without a comprehensive framework of fiscal controls, the MPC/Governor could be held simultaneously accountable to two different Parliaments.

[ForeverSinging]

OK I'll have to help then clearly as the nationalists have gone all shy.

the figures for 2011/12

9.9% revenue = 56.9billion

9.3% of UK public spending = 64.5billion

The next set of GERS figures will be considerably worse in terms of the spending gap because north sea oil revenues dropped by nearly six billion from a near record high in 2011/12

Without even looking at the figures I can tell you that every OECD nation borrows money to pay for public services.

A ten year old could tell you this. What you have in fact shown is that Scotland would need to borrow less than the current UK government does on it's behalf. It would have a smaller deficit than the UK.

[renton]

The "Scotland has no representation on the Bank of England's MPC at the moment" thing is complete bunk.

The point is the Bank of England is an instrument of law and accountable to the Westminster Parliament. Carney's decisions are scrutinised by the relevant Westminster Committees, who can compel his appearance, and the criteria and approach the BoE is to take to making decisions about monetary policy are set by Treasury directives and secondary legislation. Scottish MPs can and do form part of that scrutiny process, and Carney is obliged to take into account the impact of decisions on interest rates and QE on the UK economy as a whole, not just London or England.

A currency union involves a complete shake-up of that arrangement. It involves moving monetary institutions into an international structure, accountable to whom it is not yet clear. It is hard to see how, without a comprehensive framework of fiscal controls, the MPC/Governor could be held simultaneously accountable to two different Parliaments.

At what point and is it formalised? i.e. do the Scottish MPS have a committee where they can discuss relevent fiscal policy and put forward a set of criteria to pass through their representitive on the MPC panel? Does Holyrood get any input into these deliberations, or is your argument based on the fact that individual Scottish MPs, through playing the game at Westminster can, through seniority or through currying favour, find themselves occaisonally appointed to that august body?

[Ad Lib]

At what point and is it formalised? i.e. do the Scottish MPS have a committee where they can discuss relevent fiscal policy and put forward a set of criteria to pass through their representitive on the MPC panel? Does Holyrood get any input into these deliberations, or is your argument based on the fact that individual Scottish MPs, through playing the game at Westminster can, through seniority or through currying favour, find themselves occaisonally appointed to that august body?

The point is that NO part of the UK has a dedicated member on the MPC. The point is the MPC is accountable to the Treasury Select Committee. Which contains Scottish MPs. The opportunity is there for Scottish MPs who opt to do so to put forward concerns about the impact of QE or interest rate changes on the Scottish economy.

[renton]

The point is that NO part of the UK has a dedicated member on the MPC. The point is the MPC is accountable to the Treasury Select Committee. Which contains Scottish MPs. The opportunity is there for Scottish MPs who opt to do so to put forward concerns about the impact of QE or interest rate changes on the Scottish economy.

The opportuntiy is there for an individual, if he can remeber to do so, if he gets on the board to put forward concerns.... so there is no formal mechanism by which the wider Scottish group of legislators, whether at Holyrood or Westminster can discuss and recommend actions to the treasury committee, nor is there any guarentee of Scottish representation - only by buggins turn will we get individual party members involved. NO part of the UK may have dedicated representation - that's not necessarily a good thing, and a dedicated, formal means of doing so - whether by blocs of MPs at Westminster or through devolded administrations (although that would leave the english regions left out) would be better. So really, a currency union between the two sovereign nations would at least guarentee represnetation on BoE deliberations in a way that the current system does not.

[Ad Lib]

The opportuntiy is there for an individual, if he can remeber to do so, if he gets on the board to put forward concerns.... so there is no formal mechanism by which the wider Scottish group of legislators, whether at Holyrood or Westminster can discuss and recommend actions to the treasury committee, nor is there any guarentee of Scottish representation - only by buggins turn will we get individual party members involved. NO part of the UK may have dedicated representation - that's not necessarily a good thing, and a dedicated, formal means of doing so - whether by blocs of MPs at Westminster or through devolded administrations (although that would leave the english regions left out) would be better. So really, a currency union between the two sovereign nations would at least guarentee represnetation on BoE deliberations in a way that the current system does not.

But this is the thing. Either you believe that central banking should be done at arm's length, subject to oversight by the legislature (the status quo) or you believe in the overt and extreme politicisation of central banking. How is the latter desirable? The point is having a nominal Scottish Government representative on the MPC is no better a guarantee of influence than Scottish MPs sitting on the Treasury Select Committee.

[renton]

But this is the thing. Either you believe that central banking should be done at arm's length, subject to oversight by the legislature (the status quo) or you believe in the overt and extreme politicisation of central banking. How is the latter desirable? The point is having a nominal Scottish Government representative on the MPC is no better a guarantee of influence than Scottish MPs sitting on the Treasury Select Committee.

You are shifting the goalposts -your original assertion that the idea there was no Scottish representation was bunk, because Scottish MPs could get on the MPC. I believe this does not hold up to scrutiny, for the reasons I described above, I do not believe that actually having a formal mechanism by which the Scottish legislature can have input into the MPC deliberations, either under the current constitutional status quo or through a currency union between two sovereign states is in any way an 'overt or extrme politicsation' of the banking system. It's a matter if degree: Even at arms length, input that involves the whole of the Scottish legislature is more representative, and therefore of more positive benefit than the occasional Scottish MP who turns up via buggins turn (especially if said MP is, say, the MP for Govan, who would ruin his consituency to save his own job, every day of the week), the point is that I prefer a system where input that is representative of Scotland is a requirement into the MPC deliberations, even if, at arms length the BoE decides against said input. A formal mechanism by which the Scottish legislature can debate it's onw needs, come to a conclusion and registe rthat conclusion with the MPC is of far value of a single party member siting on the MPC who represents not more than their own viewpoint.

[Ad Lib]

You are shifting the goalposts -your original assertion that the idea there was no Scottish representation was bunk, because Scottish MPs could get on the MPC.

No. This was not my original assertion. Learn to read properly. I was ridiculing the assertion that Scotland has no influence on the MPC under the status quo simply because there wasn't a Scottish representative. I was rubbishing it as an ANSWER made by Nats to the No campaign pointing out that fiscal options would be limited without commensurate influence on monetary policy.

[renton]

No. This was not my original assertion. Learn to read properly. I was ridiculing the assertion that Scotland has no influence on the MPC under the status quo simply because there wasn't a Scottish representative. I was rubbishing it as an ANSWER made by Nats to the No campaign pointing out that fiscal options would be limited without commensurate influence on monetary policy.

I can read fine. The idea that the MPC/BoE actually does take the whole of the UK into account when making interest rate decisions (for example) is laughable at best, it is only through formal representation that you can force these institutions into taking your own needs into account, ultimately we have, as a nation have zero influence on the deliberations and inputs to the MPC/BoE and therefore no sovereignty in this regard, the occaisonal Scottish MP no more gives us 'influence' here than does the occasional Scottsih prime minister give the Scottish nation increased sovereignty in Westminster.