Or hear it from The Scotsman‘s lead story (by-lined to David Maddox):
THE UK government will not agree to allow an independent Scotland to use the pound, Chancellor George Osborne is to say tomorrow in a major speech in Edinburgh.
In a watershed for the referendum debate, Mr Osborne is set to be joined by his Labour shadow Ed Balls and Liberal Democrat Chief Secretary to the Treasury, Danny Alexander, who will also say they are ruling out a sterling zone.
That means that even after the 2015 General Election, whoever is in power is likely to block a formal currency union with an independentScotland.
The move is a blow to the Scottish Government, which laid out its plans for a formal currency union using the pound in its white paper on independence. Yesterday Deputy First Minister Nicola Sturgeon retaliated by warning that Scotland would not take on its share of the UK’s national debt if an independent Scotland was excluded from formally using sterling.
Real fear rather than just rhetoric?
However much the Salmond administration protest their “rights”, and assert that this is “bullying”, there are good reasons why London is leery.
The chimaera of oil and gas aside (which are declining assets), the Scottish economy is even more biased towards banking than (say) Iceland’s ever was. That was the point Mark Carney of the Bank of England tried to hammer home; and with which he has apparently skewered the English politicos subsequently:
In a “technocratic assessment” to Scottish business leaders Mark Carney was careful to be diplomatic, making no judgement on whether Scotland would be better or worse off if independent. But the speech pointedly contained a table comparing the size of Scotland’s banking sector unfavourably with Ireland, Iceland, Cyprus, and Spain.
In all these places, a bankrupt banking system too big for the host country led to the need for a national bailout. These countries had a banking system of between three and seven times the size of their GDP. Scotland’s banking system is 12 times the size of its GDP.
We have been here before
I cannot avoid recalling this has the making of a re-run of 1934-37 and what is grandly termed the Anglo-Irish Trade War, but more normally the “Economic War”.
- That, too, occurred as European nations strove to rebuild from a great international financial collapse. Protectionism was the current mood.
- De Valera’s Fianna Fáil government had just come to power, and was setting about making a mark for itself.
- De Valera unilaterally decided that the Land Annuities were part of the UK national debt, from which the Free State had been exempted. In a direct parallel with Nicola Sturgeon’s crude threat, payments due to the UK Exchequer were shut off.
- London’s response was to ban imports of Irish cattle. That didn’t greatly and directly hurt the Irish middle classes. It was a boon to the poorer ones (who now received “free beef”). It did heavily impact on the ranchers and big farmers, who had to switch suddenly to tillage, at a time when, worldwide, agricultural gate-prices were rock-bottom.
- The farmers stopped (and many were unable anyway) to pay rates and taxes. That, in turn, meant effective collapse of the Irish local government system — and a corresponding concentration of control at the centre (which was no great pain to Fianna Fáil).
- It all played to a rise in Irish national consciousness (again, no great pain to Fianna Fáil). There was a revival of the slogan derived from Jonathan Swift’s pamphlet of 1720:
I hope and believe nothing could please His Majesty better than to hear that his loyal subjects of both sexes in this kingdom celebrated his birthday (now approaching) universally clad in their own manufacture. Is there virtue enough left in this deluded people to save them from the brink of ruin? If the men’s opinions may be taken, the ladies will look as handsome in stuffs as brocades; and since all will be equal, there may be room enough to employ their wit and fancy in choosing and matching of patterns and colours. I heard the late Archbishop of Tuam mention a pleasant observation of somebody’s; ‘that Ireland would never be happy till a law were made for burning everything that came from England, except their people and their coals.’ Nor am I even yet for lessening the number of those exceptions.
I am constantly amazed and depressed by the number of times I come across that, mis-quoted, cut-and-pasted, by persons, even scholars, who cannot be arsed to check out the original. The final sentence is so quintessentially Swift it deserves to be included whenever possible.
- Ramsay MacDonald (for it was he) was happy to repay in kind, even to fulfil Swift’s advice. He had coal supplies to the Free State cut off. Welsh coal-owners were less enthused.
- Ireland began a programme of import substitution. Déanta in Éirinn appeared on all kinds of goods, a few of which were actually “made in Ireland” (and fewer still of real quality), rather than bolted, screwed and soldered together from imported products. The least said about native fuels (with the possible exception of Castlecomer anthracite) the better.
Even in the 1960s, drinking Bass beer was a distinct no-no among the Dublin lefties whose company I shared in the side-bar of O’Neills, Suffolk Street. I can still, just about, stomach Smithwick’s gaseous substitute.
We all knew that #Indyref would turn nasty.
Did we expect it all to go so poisonous, so early?