Scottish Independence?

SCOTTISH INDEPENDENCE? NOT SO FAST!

When Scottish First Minister Alexander Salmond thought aloud of a referendum to gain independence for Scotland ten days ago, the British Government called his bluff: Prime Minister Cameron demanded a referendum "as soon as possible," with only one question asked, "independence - yes or no." Grudgingly, Salmond set a date for the referendum in autumn 2014.

 

The consequences for Scotland, in case of a YES vote, will be grave and significant. But as latest polls show, the majority of Scots want to remain in the UK, while a clear majority in England, plagued by high and unfair subsidies for Scotland, favour Scotland to leave the UK. Alexander Salmond will have to do a lot of convincing ahead of the treacherous plebiscite.

 

In the past few weeks the Scottish "government" sounded out with the UK Chancellory whether Scotland will keep a monetary union with England and can retain the British Pound as its currency. At the time I was part of a 65-men group advising George Osborne in a feasibility study of monetary consequences if the UK splits up. The result pours more cold water on Scottish aspirations: it would either severely undermine Scottish independence in fiscal matters - more so than it does today! - or, more likely, lead to an end of the British pound as legal tender in Scotland. A Scottish pound would immediately devalue by 20-30 per cent, and any desire of Scotland to adopt the euro would be blocked by London.

 

A classical case of being caught between a rock and a hard place, I'd say...