Would the euro be good for Scotland?

No issue more clearly illustrates the irrelevance of independence in the modern world than the question of national currency.

Even the SNP have conceded that Scotland cannot have its own currency; a separate Scotland would have its interest rates set either in London – if sterling remains our currency of choice – or in Brussels, if we join the euro.

But the fact is that an independent Scotland asking, cap in hand, to be re-admitted to the European Union after leaving the UK – and therefore the EU – would have no choice but to adopt that respected and admired colossus of the international finance – the euro – as its currency.

So, come on all ye cybernats, let’s see your answers to Number 4 in our series, Questions to which the answer is “Er…”

In what way would Scotland be better off in the euro, with interest rates set in Brussels rather than London?

Got a question which you suspect our nationalist overlords would rather not be asked? Email your suggestion to info@LabourHame.com

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32 thoughts on “Would the euro be good for Scotland?

  1. In what way would Scotland be better off in the euro, with interest rates set in Brussels rather than London

    I don’t know the answer to that, but think you ought to go for it anyway. If you have a completely different currency than the rest of the UK then it should hasten scottish independence. Once that happens we in England might be able to elect a real Conservative government committed to taking us out of the undemocratic, socialist and nightmarish European Union.

  2. Both Salmond and Sturgeon are already talking about “when” Scotland adopts the Euro not if. Salmond saying that he wants “Scotland (ie: him) to have a seat at the “top table” in Europe. That’ll be their 30 pieces of silver for handing Scotland away to Europe on a plate, then. Salmond and power do not belong safely in the same sentence. Just my humble opinion.

  3. im not sure about scotland there more friendley there how canwe safe our health service @ would the elderly peoples home be better under nhs or nasanalised some one is making good money scotland dont have this problem theres is free@dont have to sell there homes

    1. Only if we then take measures to maintain the Scottish Pound against Sterling, as Ireland had to do with the punt. You can’t just declare your currency to be interchangeable. It doesn’t work that way.

      1. And of course, the bank of England will set interest rates on the basis of the English economy, not the Scottish one. So rates may be too high for Scotland, because of the need to damp down inflationary pressure in South East England, while Scotland needs lower interest rates to stimulate growth.

          1. Because at the moment the Bank of England takes account of the economic situation across the UK.

            Its one reason why Ireland broke their link with the pound sterling.

  4. “But the fact is that an independent Scotland asking, cap in hand, to be re-admitted to the European Union after leaving the UK – and therefore the EU”

    Scotland is already part of the European Union. An internal political change would not change this. Like UN membership of Czech and Slovak Republics after Velvet Divorce.

    At any rate, Scotland, with its massive budget surplus, would not need to go “cap in hand” to the EU at all. They would be delighted to have us as a member. It is inconceivable that they would not accept us with open arms. Unless, of course, the British are going to pressure them not to. Would you support the British government doing so?

    I would favour a Norwegian-style arrangement rather than membership of the EU.

      1. Who says that the euro will survive the current situation.

          1. Who says we will be independent?

            The voters will have a choice in a referendum in 2-3 years time.

          2. The voters will have a choice in a referendum in 2-3 years time.

            Serious question: the “2-3 years” timescale isn’t mentioned in the SNP’s 2011 manifesto. Isn’t it odd – bordering on the dysfunctional, even – that an arbitrary delay in the referendum by Salmond meets with 100% universal approval from every single SNP member? Isn’t there debate in the SNP any more? Or are members so in awe of Salmond that they would support literally anything he suggested?

          3. “The voters will have a choice” is not the same as “scotland will be independent”. Unless you are taking the result for granted?

          4. What happened to the vote we were supposed to get on the Lisbon Treaty?

            The independence referendum was promised during this term it won’t get buried for 30 years like the Mcrone report by Callaghan.

          5. “Serious question: the “2-3 years” timescale isn’t mentioned in the SNP’s 2011 manifesto. Isn’t it odd – bordering on the dysfunctional, even – that an arbitrary delay in the referendum by Salmond meets with 100% universal approval from every single SNP member? Isn’t there debate in the SNP any more? Or are members so in awe of Salmond that they would support literally anything he suggested?”

            Before the referendum there needs to be proper debate, both sides need to put forward their arguments and the electorate need to be appraised of all the facts, for and against, to enable them to make an informed decision.
            I find the calls by the unionist parties for an immediate referendum ridiculous, they are in fact saying that they want the referendum before the issues have been properly debated and people know exactly what they are voting for.

            For this reason, I think it is correct that the referendum should be in the latter half of the term and no, I am not a member of the SNP.

  5. The nations you mentioned all had to negotiate new entry to the UN, as they were not succesor states of the USSR. We would not be the successor state to the UK. Therefore, we would have to negotiate entry to the EU (probably not hard). We would be welcomed with open arms, but would most likely have to accept Schengen and the Euro – passports (and bureaux de change) at Gretna! 😉

  6. “Scotland is already part of the European Union. An internal political change would not change this.”

    Er, yes it almost certainly would, since it would be in the self-interest of all the other member states to treat Scotland as a new entrant.

    “Like UN membership of Czech and Slovak Republics after Velvet Divorce.”

    The Czech and Slovak Republics mutually agreed that neither of them would be a successor state, so both of them had to reapply to the UN. LOOK IT UP.

    “At any rate, Scotland, with its massive budget surplus, would not need to go “cap in hand” to the EU at all. ”

    There is no “massive budget surplus”. Even assuming 90% oil revenue, that money (and more) is already being spent in Scotland.

    I like this site; I can see myself contributing here at some point.

  7. There is no “massive budget surplus”. Even assuming 90% oil revenue, that money (and more) is already being spent in Scotland.

    In your opinion. While you are getting links to back your numbers up a comparison to the UK plc numbers wouldn’t go amiss.

  8. This one is easy for me, but I’m no SNP member. If the SNP promise “independence in Europe” and can deliver the independence part, then they can deliver Europe too. It might not be the European Union Europe they have in mind today, but so long as businesses can trade freely as now and nobody needs a visa to go on holiday that wouldn’t need one today, will anyone really care? Apart from the few EUphiles, I suspect the answer is no.

    Anyway, the Euro. Short answer “no” and the long version “no, not unless the UK joined”. Even if it were a necessary condition of joining the EU? Same answers. And for Schengen too. An independent Scotland which didn’t issue its own currency should use the same one as England.

    As observant travellers will know from airport signage – and you must be a very infrequent traveller or very lucky indeed not to have been bored enough to read all the signs when stuck in the passport queue – freedom of travel and trade is not the result of EU membership but of membership in the EEA. Our esteemed political leaders and civil servants might notice the difference – fewer summits to attend and fewer photo-ops – but the rest of us? One less election in the four-year cycle? Slightly different passports? No CAP or CFP? Well, that last one might be noticed, and be popular too.

    But I don’t believe an independent Scotland would be fortunate enough to thrown into the EEA or EFTA briar patch. I can easily imagine the UK government twisting arms and calling in favours to make very sure that didn’t happen. After all, what would all those euroskeptic MPs and voters in England say if Scotland managed to escape and they were left behind, still trapped in the EU?

  9. Just one slight correction to the original post, I believe the European Central Bank HQ, where the interest rates for the Euro zone are set, is in Frankfurt not Brussels.

    I’m sure I will be corrected if I’m wrong, but I do remember this was the very subject of a passionate debate on both sides at the SNP conference a few years ago, and my understanding of the current SNP policy that after immediately after independence happens we’d keep the pound. Before any proposed entry into the Euro, the people of Scotland would have to vote for it in a referendum, so like independence it will be the people’s decision to make. That seems to me the right and proper way to decide such a major issue.

    I have to ask the question, was it not only a few years ago that Labour were all in favour of the UK joining the Euro as well, subject to Gordon Brown’s five economic tests? Is this still Labour policy or is this no longer the case? I don’t know where Labour stand at the moment, but I know the UK Coalition government are split (Tories against and Lib Dems for).

    I think joining the Euro should be a long term aim of an independent Scotland, as I think it should also be an aim of England, Wales and Northern Ireland should they exist as a continuing UK or as independent countries. However I can’t ever see our friends south of the border ever wanting to join a single currency, for them the pound is an integral part of national identity. The English seem to protect their currency, and also their system of weights and measures, as closely as the French protect their language.

    1. Yes, keeping the pound would be fine – but then the Bank of England need not worry about economic conditions in Scotland when setting interest rates. Bear in mind that the value of the pound now is affected by the North Sea oil revenues, (ie it is technically a petro-currency). After independence it wouldnt, and its value would fall. BoE might see a need to increase rates to prevent inflation.

      1. I do accept the point partially but you say above that Ireland left the currency union with the UK because the BoE was making decisions without regard to Ireland isn’t entirely true. Firstly I believe they left to join the first European Rate Mechanism (although I may be wrong about that), but also its wrong to say that Ireland had no control over decisions that were made since they did have some representation and gave evidence to the BoE (after all if we are using their currency it will affect any predictions they make with regard to the consequences to interest rates, so if they were to not look at the Scottish economy and only consider the English economy when making decisions and expecting the predictions of their consequences to be accurate would be akin to finding a typewriter with five of the letters missing and expecting to be able to write a novel on it). Aditionally when Ireland was in a monetary union it did still have a Central Bank which looked specifically at how these decisions would affect Ireland and did still have some economic levers,

        Nonetheless I do still accept your point, and would perhaps go further and say that when the BoE does set interest rates it sometimes decides them primarily as to how it would affect the South East even if these decisions are to the detriment of those who live in the North West…

  10. ‘But the fact is that an independent Scotland asking, cap in hand, to be re-admitted to the European Union after leaving the UK – and therefore the EU – would have no choice but to adopt that respected and admired colossus of the international finance – the euro – as its currency.’

    I’d like to see some evidence that this scenario would occur. Scotland in the EU, and would remain so – see the Czech – Slovak velvet divorce. I have never previously heard it suggested that instant (or even eventual) adoption of the euro would be imposed on either an independent Scotland, or the continuing fragment of the UK. Have you are a source to support this assertion?

  11. Richard,

    Acceptance into the EU for new states (eg a newly independent Scotland) is conditional on that state adopting the euro along with a whole raft of other conditions.

    The SNP’s position on the CFP is another example of delusional wishful thinking where they seem to believe a newly independent Scotland will be able to withdraw from the CFP whilst retaining EU membership – somebody should mention to them that acceptance of the CFP is a condition of EU membership…

  12. The SNP also seem to have the same problem with they’re thinking on the UKSC. They dislike it simply because it is based in London. So despite it having the foremost expert in Scot’s law sitting on it they want cases to be sent to Strasbourg. The European court with exactly zero Judges with any experience in Scot’s law.

    Compare that with this case. They say want independence but that isn’t entirely true. They want to adopt the Euro where interest rates will be set by the European central bank. So they actually want a monetary policy that takes even less consideration of Scottish interests. The SNP need to have a sit down and actually think about what independence means for Scotland.

  13. The first point I would make is that no one knows whether we would need to rejoin the EU or not upon independence, since the Commission has chosen to be silent and ambiguous on the subject, as there are no formal guidelines on it.

    If we were, however to rejoin, looking at the Greenland precedent (Greenland voted for autonomy from Denmark, still remained in the EU and had to make a formal request to leave the EU) is interesting. Whilst this is in no way a direct precedent (and I wouldn’t claim it was) it did show that in an unprecedented event with no formal procedure that explained what to do the Commission was quite sensible and pragmatic during the process and it wasn’t at all chaotic.

    For example, people say we would have to join Schengen, but since Scotland shares no land border with a Schengen country, there would be no benefit to the Comission in getting Scotland to join and anyone would recognise that it would make more sense for Scotland to be in the Common Travel Area then Schengen (after all, the UK and ROI would be in these discussions and voting on it and it would be in their interests as much as ours that we could opt out of Schengen, and there was a programme of The Record Europe where MEPs were commenting that Malta’s inclusion in Schengen has created more problems then benefits and that they shouldn’t include Cyprus).

    As for the Euro comments, I’m in favour of the Euro and was calling for the UK to join, but in response to comments that Scotland would be forced to join the Euro I’d point out that as the rules are currently written it would be impossible for an independent Scotland to join, since the main requirement is that our currency be entered into the rate mechanism, and I doubt that Cameron and Osborne would enter into the ERM2 just to help Scotland join the Euro. So the option of creating our own currency would not only be an option (I’ve never heard the SNP say Scotland “cannot have its own currency”, the Torries yes, but not the SNP), but would probably be a requirement if we wanted to join the Euro (but hey, its not like we don’t already have the banknotes!).

    Aditionally, Sweden is technically required to join the Euro but its been posponed indefinitely since they called a referendum and the people said no and the EU has accepted that, so we would have three options and if we really want to stay out the Euro it shouldn’t be a problem, but as I say I think if we are in a free trade area its only logical that we all use the same currency.

  14. Overall I believe the euro would be beneficial to the Scottish economy,

    Off the 3 options Scottish currency, Sterling or euro, sterling is arguably the least credible. If you support the idea of being part of a large currency zone to increase trade removing currency volitility within that large trade zone, and also increasing you chances of increasing inward investment by companies investing within that currency trade zone then the euro is the obvious choice.

    If you take the view of wanting control over monetary policy ie interest rates and having the currency floating at a rate compatible with the strength of the domestic economy then a Scottish currency is the obvious choice.

    As such there is not really a good argument for sterling. ie the anti euro argument holds true for being anti sterling.

    The arguments for these options is made more convincing when we look at the inappropriateness of sterlings monetary policy for the scottish economy. UK monetary policy has for a long time been set to benefit the south of the England. The needs of Scotlands and the north of Englands economy are ignored. Much of this is due to the higher interest rates needed to dampen down inflationary pressures in the south. The eurozone by contrast if you look over the past 3 decades (the DM before the euro) had interest rates that tend to be more inline with Scottish economic needs.

    While this was more prevalent under Thatcherism due to monetarism and reliance on interest rates as the sole weapon against all types of inflation including asset inflation, it was also true under the disasterous mismanagement of the economy by Brown. One only needs to look at the statements of uk economic mgt by the then governor of the Bank of England who said in an interview that uk interest rates were set to control inflation in the south and unemployment in the north was a price worth paying. Off course he was only relaying the inevitability of the economic policy within the framework set by the then labour government.

    The question not addressed by the guy started the thread is how can uk economic policy be changed so that monetary policy is not set for the benefit of the south of england and to deal with its overheating and inflationary pressures without severely damaging the economies of the areas in the north of the uk.

    I believe it was a Goldman Sach economic report that said that uk government economic policy favouring the city of london cost manufacturing dearly due to the exchange rate being over valued.

    We also have to ask from a uk perspective if it was the uk decision to stay out of the euro that was responsible for the collapse in uk manufacturing from over 21% of the economy in 1997 to around 11/12% of the economy when labour were dumped from power. (Germany still has over 20% of its economy based in manufacturing). Surprisingly in the previous 17yrs of tory rule manufacturing share only fell from 24% to 21% despite the whole perception of de-industrialisation.

  15. The truth is that an independent Scotland is highly unlikely to be able to control its own currency or interest rates, in the foreseeable future at least.

    So independence will make no difference to that position.

    At present Scotland has no control over interests rates and currency and an independent Scotland probably wou’dn’t either.

    So as far as the debate about independence goes this question is not all that pertinent as independence wouldn’t make much difference.

    In reply to the question “the “2-3 years” timescale isn’t mentioned in the SNP’s 2011 manifesto. Isn’t it odd – bordering on the dysfunctional, even – that an arbitrary delay in the referendum by Salmond meets with 100% universal approval from every single SNP member? Isn’t there debate in the SNP any more? Or are members so in awe of Salmond that they would support literally anything he suggested?”

    There is no arbitrary delay – everyone in the SNP knows what the likely timescale for any referendum would be. Towards the end of the term in which we are elected. The reasons for that are surely obvious?

    1. Any other things that “everyone in the SNP” knows (how? telepathically?) that the rest of us should know? Like what an independent Scotland will look like?

  16. Well John we take our decisions democratically, that’s how we know stuff.

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