Coffee House

Cheat sheet: George Osborne’s speech on the pound

13 February 2014

9:44 PM

13 February 2014

9:44 PM

‘If Scotland walks away from the UK, it walks away from the pound’, the Chancellor said this morning. In a speech aiming to blow a hole in the SNP’s campaign, George Osborne has set out why sharing the pound isn’t on the cards for an independent Scotland. Here are the key points from his speech, the reactions and why a currency union with the rest of the UK won’t happen

1. The Tories, Lib Dems and Labour have united on a technical fight
It’s very rare that George Osborne, Ed Balls and Danny Alexander can find something to agree on. The fact they’ve publicly united against a currency union with Scotland shows how pressing the matter is.

Following on from a speech by Mark Carney two weeks ago on the perils of any currency union, Osborne has described the ‘gaping chasm at the core’ of the SNP’s plans for an independent Scotland:

‘The evidence shows it wouldn’t work. It would cost jobs and cost money. It wouldn’t provide economic security for Scotland or for the rest of the UK. I don’t think any other Chancellor of the Exchequer would come to a different view’

The Shadow Chancellor Ed Balls agrees it won’t happen:

‘It would be bad for Scotland, it would place an unacceptable burden on the UK taxpayer, it would repeat the mistakes of the euro area. In fact worse, you’d be trying to negotiate a monetary union as Scotland is pulling away from the UK. It won’t happen, I wouldn’t recommend it.’

And for the political hat trick, Chief Secretary to the Treasury Danny Alexander:

‘This isn’t bluff, or bullying, it’s a statement of fact. The SNP’s claims that an independent Scotland could or should be able to share the pound are pure fiction. When we vote in September, no one in Scotland should vote for independence in the belief that we could keep the pound.’

2. Treasury Mandarins don’t think a currency union will work either

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The Permanent Secretary to the Treasury Nicholas Macpherson backs up these views. Surprisingly, his private advice to the Chancellor has been publicly released. In a letter to the Chancellor, Macpherson points out currency unions are ‘fraught with difficulty’ and require ‘extraordinary commitment’ from all parties

‘I would advise you against entering into a currency union with an independent Scotland. There is no evidence that adequate proposals or policy changes to enable the formation of a currency union could be devised, agreed and implemented by both governments in the foreseeable future.’

The Treasury has set out four requirements for a currency union: banking union, greater fiscal risk sharing, having the same monetary and exchange rate policy and permanence of any union — all of which are uncertain under the plans for an independent Scotland.

Macpherson sets out three reasons why the union ‘as currently advocated’ won’t work:

‘First, the Scottish Government is still leaving the option open of moving to a different currency option in the longer term. Successful currency unions are based on the near universal belief that they are irreversible

‘…Secondly, Scotland’s banking sector is far too big in relation to its national income, which means that there is a very real risk that the continuing UK would end up bearing most of the liquidity and solvency risk which it creates

‘…Thirdly, there is the problem of asymmetry. The continuing UK would be at risk of providing taxpayer support to the Scottish financial sector and sovereign ‘
Many of the points Macpherson and the Treasury has made against a currency union with Scotland could equally be applied to the Euro.

3. As punishment, the SNP are threatening to default on UK debt

As Macpherson predicted, the SNP’s Nicola Sturgeon has accused Osborne of trying to fool the Scottish people with ‘campaign tactics’. In retribution, she has stated that an independent Scotland wouldn’t take on its share of the UK’s national debt, estimated to be in the region of £120-150 billion:

‘All the debt belongs legally to the Treasury, as they confirmed just last month – we can’t default on debt that’s not legally ours. However, we’ve always said we think Scotland should meet a fair share of the costs of that debt – but assets and liabilities go hand in hand’

4. Reneging on Scotland’s portion of the UK debt isn’t credible

The Permanent Secretary doesn’t think it’s a believable threat because it would hinder an independent Scotland’s economic credibility, the affect on gilt yields is likely to be minimal and any increase in funding costs would still be less than an ill-thought out currency union.

Osborne has likened the threat to saying ‘because my neighbour won’t agree to my unreasonable demands, I’m going to burn my own house down in protest’ while Balls has said the threat shouldn’t be taken seriously because it would be ‘utterly catastrophic’.

5. The SNP can now either join the Euro, create a new currency or use the pound alone

The SNP now has to decide what an independent Scotland would do: adopt the Euro, start a new currency or using the pound and going alone. Nicola Sturgeon has said ‘neither George Osborne not anyone’ can stop Scotland. She might well be right but this would mean no Bank of England as the last resort lender. Balls has lambasted the latter idea:

‘The idea that Scotland could keep the pound and the Bank of England and be subsidised and supported by the UK taxpayer having chosen independence is not going to happen’

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Show comments
  • Radford_NG

    Scotland can if it wishes use the GB£,as Panama and Liberia once used the US$,but it will have no more say then those two countries did in how the currency is run.

    It can sell its oil and convert the petro-dollars into GB£.

    It can print its own currency notes at a par with the GB£;provided that for ever Scottish £/$ it issues it deposits one GB£ with the Bank of England (as the Scottish banks,and those of the Isle of Man and Channel Islands do now).

    It can print its own Scottish £/$ notes and declare them to be at par with the GB£;as the Soviets did with the Rouble for decades.(But this may well leave them undervalued;or lead to young men in black leather jackets will wades of notes hanging around outside tourist hotels.)

    Or it can start with the GB£;convert these [via the Bank of England] into Scottish £/$ notes;declare them at par with the GB£,then at the right time declare them to be fully convertible on the international markets.

  • Radford_NG

    Osborne’s speech is too complicated for general consumption.He should give the simple message.”Our policy in the future,and at the next election,will be what it was at the last election.We will not enter into any kind of economic,financial or monetary union with any other country;be it Germany,France,Russia or,if it comes to it,Scotland.We must be free as a nation to independently set our own financial policies in our own interests.”

  • JPWREL .

    From the other side of the Atlantic this argument is fascinating. Over here in the states we argue whether or not we should believe in evolution and if people without heath insurance are deserving of it. But then of course we are the ‘exceptional country’ and God’s preference versus all others.

    Just wondering if the Scot’s don’t get to pocket Sterling will they in their fury march once again on Carlisle? Who would be willing to extend them credit, the same folks who lent to Greece and Ireland? Well, the Scot’s certainly have the right to make fools of themselves, over here we do it all the time and call it government.

    • Jambo25

      If you are as badly informed of what’s going on over here as you appear to be try reading up on the reality of the situation.

  • ian

    Who is paying for this referendum ? who pays Alex Salmonds wages ? and when this is over, will we have a referendum in England for English independence ?

    • Jambo25

      Who pays for Dave and co? Who’ll pay for any EU referendum?

      • ian

        The UK taxpayers are paying for Dave and co, because that is the UK government. Why should the UK taxpayers pay for Salmond and co when their only interest is Scotland ? If we do get a referendum for English independence, will scots taxpayers pay for the cost of it?

        • Jambo25

          So the costs of the political system in Scotland should be paid from taxes? Only those in England?

  • ChuckieStane

    One might hope a bluffers guide would get the facts right.

    In stating “The SNP can now either join the Euro, create a new currency or use the pound alone”, Mr Payne over-simplifies.
    Scotland cannot join the Euro without a minimum of two years in the ERM. For this, of course Scotland would first require its own currency. The a sterling union therefore is being proposed partially as a defence against enforced euro entry. Those who gleefully suggest that the currency issue has not been thought through may be wide of the mark.
    And of course, to be pedantic, the “SNP” cannot join the euro or create a new currency. An independent Scotland could of course consider these options.

    • El_Sid

      Most of the rules that relate to Europe are not hard and fast. The ERM requirement is just about syncing the economy of Bongostan with the eurozone. The UK£ is stable enough against the € that that worry doesn’t really apply so in this special case the rule about the ERM would almost certainly be relaxed. I’d guess sterling satisfies the convergence criterion of “at least two years without strong deviations from the ERM II central rate” – ERM II has a band of +/- 15%.

      Given that independence will take a few years to implement in any case, there would be time for iScotland to transition to the € directly from using the £ as part of the Union.

      • Jambo25

        My preferred option.

        • El_Sid

          I thought the independence argument was that too many economic decisions were being taken outside Scotland with no heed to Scottish needs?

          So now you want to be another Greece within the Eurozone?

          • Jambo25

            Why is the Unionist default position one of instant resort to insult? You could have asked if I wanted to be another Finland or Austria in the Eurozone but you couldn’t bring yourself to do that. Could you?

  • steve patriarca

    Given what has happened to the Pound since Mr Osborne became Chancellor maybe the rest of UK might be better using the new Scottish currency? Mr Osborne used devaluation and low interest rates to take money from British pensioners and savers and to discount UK assets for sale to foreigners.

    • El_Sid

      Mr Osborne used devaluation

      Err – the £ has increased in value against major currencies since May 2010. It was worth $1.50, now $1.65, was worth €1.15 now €1.20 etc

      • Guest

        In January 2007 the Pound Euro rate was 1.5; a year later it had dropped to 1.39. In Jan 2010 it was 1.08. That is about a 33% devaluation which began under Labour and was fuelled by this Government through the ridiculous interest rates – which have also destroyed peoples’ pensions through making annuities impossible. Osborne could have improved the situation by raising interest rates but this he failed to do. The pound remained very low – around 1.10 for much of his first two years as Chancellor. To describe the current rate of c. 1.21 as doing well against “the damned Euro” is to miss the point that this is still a major devaluation compared to rates for many years before the “crash” – the low rate has allowed the sale of UK assets to foreigners – especially fuelling the London property boom.

        • El_Sid

          As you say the devaluation happened between 2007 and January 2010, when there were Scotsmen in No 10 and No 11. Osborne took over in May 2010. How is the devaluation the fault of Osborne, when the pound has strengthened since he took over?

        • Damon

          “Osborne could have improved the situation by raising interest rates but this he failed to do.”

          Osborne could also have damaged a fragile recovery by raising interest rates. This, fortunately, he chose not to do.

          • Jambo25

            A recovery fuelled by a return to private debt and a London and South housing bubble. Look at Carney’s statements from last week.

      • steve patriarca

        In January 2007 the Pound Euro rate was 1.5; a year later it had dropped to 1.39. In Jan 2010 it was 1.08. That is about a 30% devaluation which began under Labour and was fuelled by this Government through the ridiculous interest rates – which have also destroyed peoples’ pensions through making annuities impossible. Osborne could have improved the situation by raising interest rates but this he failed to do. The pound remained very low – around 1.10 for much of his first two years as Chancellor. To describe the current rate of c. 1.21 as doing well against “the damned Euro” is to miss the point that this is still a major devaluation compared to rates for many years before the “crash” – the low rate has allowed the sale of UK assets to foreigners – especially fuelling the London property boom.

        • steve patriarca

          as for damned Euros, sure wish I had transferred Sterling to Euro in 2007!

        • Denis_Cooper

          After the major devaluation of sterling its trade weighted index bobbed along around 80’sh from early 2009 until recently:

          http://www.bankofengland.co.uk/boeapps/iadb/fromshowcolumns.asp?Travel=NIxIRxSUx&FromSeries=1&ToSeries=50&DAT=RNG&FD=1&FM=Jan&FY=1963&TD=14&TM=Feb&TY=2014&VFD=Y&CSVF=TT&C=IIN&Filter=N&html.x=16&html.y=16

          There are now indications that it is breaking upwards out of the range it has occupied for well over four years, but it is still too early to be certain about that.

          • steve patriarca

            Let’s hope so. But in the meantime as you know there has been a huge property boom in London – some would say a bubble – and the Ukrainian and Russian oligarchs with their €100 million plus residences are just the tip of the iceberg. But the recovery is not led by British enterprize but by a closing down sale generated with cheap sterling. I think that much of the erosion in Conservative support to UKIP is actually not down to Europe per se but to the attack on savers and pensions.

            • Jambo25

              You could well be right. The attack on my pension started with Labour who reduced the value of my occupational pension by a minimum of 25%. My wife’s private pension was then drastically reduced by a mixture of incompetence from her pension provider and deliberate government action. Our sizable savings are being debauched by the present policy of (effectively) negative interest rates.

    • Andy

      You sure about that ? Last time I looked the Pound was at a 3 year high to the dollar, and is doing well against the damn Euro.

  • beenzrgud

    The SNP are correct in asserting that a Sterling zone makes sense for UK, but only if there is a common monetary and fiscal policy. We have a level of homogenity in the UK that the big chiefs in Brussels can only dream about, and if they did have such homogenity in the Eurozone then it is certain that their current headaches would be significantly diminished.
    One option would be for Salmond to accept control from Westminster during the period between gaining independence and entering the Eurozone, when control would pass to his bosses in Brussels and Germany.

  • Swiss Bob

    If Scotland votes for independence they will have to take on their liabilities otherwise they have no right to a share in the assets.

    They’re not that stupid, currency union or no.

    • Nicholas chuzzlewit

      Mmm, I honestly believe Nicola Sturgeon for one is that stupid.

      • ButcombeMan

        After her performance yesterday, I have to agree.

        I actually felt sorry for her in her inadequacy and inability to respond to Brillo.

        Why on earth did she go on the show without an answer to the key question?

        • Nicholas chuzzlewit

          Because she is arrogant and stupid.

  • Temple Melville

    the SNP are going to use Bitcoins as the currency in an independent Scotland

  • Hegelian

    What Cameron can do is get the French and the Germans and the Spaniards to declare that an independent Scotland will be considered an international pariah state as it has broken up one of the oldest and most distinguished democratic and liberal states in the world.
    This is in no one’s interests and will not be permitted by the international community. Therefore France, Germany and Spain will veto Scottish entry into the EU.

    There will also be a ban on EU trading with Scotland.

    The US could declare that there will be trade sanctions against Scotland.

    • Wessex Man

      You are a bigger halfwit that Asalord, if Scotland votes to become independent that is their choice and no Englsh man or woman that I know would stand in their way.

      The fact that the UK don’t wish to share our currency with a newly independent Scotland would not take away my hope that they succeed in their ambitions.

    • Makroon

      Some hope. The French will return to their traditional role of using their Scots ‘cats paw’ to stir up trouble for England.
      That might change if Salmond brings in an 8% corporate income tax rate – he will need that at minimum, to compete with an Ireland, comfortably established in the Eurozone.
      The left-wing majority in Scotland seem to think they will have “swingeing taxes on the rich” after independence.

    • asalord
    • Jambo25

      Yes, because rUK is so popular with the bigger EU states at present. Nurse! Nurse!

  • Hello

    Well done Ed. Balls. If only he had been leader of the Labour party.

  • monty61

    I can’t stick Gideon myself but I thought he made a good speech here and I’m pretty convinced by the arguments.

    Then I called my mum in Lanarkshire tonight and found it’s actually hardened her opinion – she’s a confirmed Yes now.

    It’s very hard for ‘low information’ types (like her) to follow the economic argument presented here so they go with emotion – this is seen as Old Etonian getting snotty with Scotland, ‘so we’ll show him what we’re made of’. So it seems at least some of the nonsense Salmond and co have been putting out in response is getting to its intended targets.

    Interesting problem for the pro-Union campaign.

    • Michael Mckeown

      Just tell your mum that if she has a mortgage then even if whatever currency Scotland has is pegged to the £ on a 1 to 1 basis then she will still need to convert it and that will cost her every month.

      • CraigStrachan

        Could be that, or could be that her mortgage payment and her income will be denominated in different currencies.

        • Michael Mckeown

          Everyone’s mortgage, business and personal, in Scotland is in sterling so if sterling is not used, and its unlikely it will be now even unofficially, then everyone must either remortgage or convert currency but either way everyone will be paying out.

          • El_Sid

            if sterling is not used, and its unlikely it will be now even unofficially,

            I’d say unofficial sterlingisation is overwhelmingly the favourite now, in the same way that Ecuador and El Salvador etc use the US dollar. It can be a useful discipline for governments and banks that are tempted to be profligate, although it would mean that Edinburgh’s financial institutions would almost certainly have to move to London. See this paper :
            http://www.frbatlanta.org/filelegacydocs/erq306_quispe.pdf

    • Nicholas chuzzlewit

      Good points and I know what you mean about “snotty” and irritating Old Etonians. I had the foresight to send my boys to Harrow with the express intent of them avoiding such epithets later in life.

      • Makroon

        If your sons are Tories, it won’t help. Osborne of course, went to St Pauls and is of Anglo-Irish extraction, but is still a “snotty Old Etonian” – it is not a descriptor, it’s an insult. Same with the “turncoat” Scot, Mr Gove, often described on here by the dimmer, Labour trolletariat as an “out-of-touch Old Etonian”.

        • Jambo25

          Gove went to Robert Gordon’s. A public day school; so quite posh

          • Nicholas chuzzlewit

            Pathetic. Condemning a man for being well educated and attending a good school.

            • Jambo25

              Wow . Whose condemning him? Its exactly the same kind of school I went to but slightly less posh.

    • asalord

      “It’s very hard for ‘low information’ types (like her) to follow the economic argument presented here so they go with emotion…”

      You mean emotion like,”I’ll fight Scottish independence head, heart, body and soul”?

      Your last comment at least gets it right. British nationalists are so disassociated with politics in Scotland that it is impossible for them to come up with any credible referendum strategy.

    • Golben Amduke

      I’m sure your Mum isn’t stupid or low information at all, and she is a voter which is what counts ultimately, but you’re right to point out that it’s the irrational that is dominating this campaign. Pity because it usually leads to disaster. To spend the next 15 years sorting out the mess that separation will bring when everyone needs to pull together to give the UK an advantage in the global economy is very short-sighted. Why do you think the newly-minted nations of CEE are queuing up to join the EU?
      George Osborne went to St Paul’s, not Eton. But that doesn’t stop people getting ridiculously chippy about it.

      • monty61

        She’s not stupid but when Osborne talks about the dynamics of a currency union she hasn’t a clue what he’s talking about. All she can see is a toff with a message she perceives to be anti-Scottish.

        I totally agree that separation is a ridiculous, petty minded idea in this day and age, I was merely making the point that the mood music made by the SNP can trump rational argument when people can’t follow the argument (as a great many people can’t), leaving the pro-Union campaign with a bit of a problem. It means argument isn’t enough, they need to get the emotional tone right.

        She’s a pensioner BTW, no mortgage. Interestingly my dad (ex-RAF) is staunchly pro-Union and fiercely anti-Salmond.

        • Colonel Mustard

          “All she can see is a toff with a message she perceives to be anti-Scottish.”

          Then that is more about her than Osborne. In fact it is a meme for much of Scottish Nationalism per se. They just don’t like English toffs and are turned off the moment the mouth opens. I have seen it first hand. It’s remarkably bigoted.

          • allymax bruce

            Winston Churchill complained of the very same when he ran for a Liberal seat up here. He was chased out of the town, onto a train, to which he promised to never come back!

            • FrancisHorner

              errr…. he was Liberal MP for Dundee for 14 years (1908 – 1922)

              • allymax bruce

                So? Doesn’t invalidate my comment; what I said is true. The validation comes in the relation of Col’ Mustard’s rebuke of the hoipolloi by the elites. Your comment is adjacent to the ‘thread’.

                • Nicholas chuzzlewit

                  Yes it does actually because it shows your comment to be totally and unalterably untrue.

                • allymax bruce

                  Now, now, old fruit; your statement is a lie. You’re still sore at ‘lean forward, heid between yer knees’; can’t you see the beligerent vitriol in your comments?

                • Nicholas chuzzlewit

                  I never lie and you have lost. Salmond’s bluff has been called and now he is scampering around looking for options. You played the game and lost. Get over it.

                • Jambo25

                  Actually, it doesn’t.

                • Nicholas chuzzlewit

                  You endorse the view that England is a “Fascist Empire” and so your views count for nothing.

                • Jambo25

                  Nice to see your view of free and fair discussion.

                • Nicholas chuzzlewit

                  Disgusting to see you endorse the view that England is a “Fascist Empire”.

        • Golben Amduke

          Col Mustard: Please can we give Monty’s Mum the respect she deserves? She is a voter and the SNP have, quite understandably, tapped into a dep-seated fear in being seen to fight the corner of Scots agains the English.
          Unfortunately the Nats have just fallen down a massive hole in terms of the currency union issue, and it may not be beyond the whit of the Yes campaign to present that in a way that it is digestible to the voters.

          • Jambo25

            That’s why Salmond is returning to it this morning with a public letter to Cameron. Do you actually think that the SNP don’t have pollsters and spin doctors working for them.

  • GnosticBrian

    If there are any constitutional lawyers on this site, can you please help me with the following? The 1536 Act of Union joined England and Wales. The 1707 Acts of Union united Scotland and England (which includes Wales). The 1800 Acts of Union united the Kingdom of Great Britain (England, Wales and Scotland) and the Kingdom of Ireland. If Scotland votes for independence the entity created by the 1707 Acts no longer exists. Does that mean that Ireland is no longer united with England (including Wales)?

    • Michael Mckeown

      I’m not a lawyer but I do know that the union with Ireland act stayed on the statute books for decades after Irish independence so there is no reason to expect the 1707 act to be repelled in our lifetimes as doing so means nothing, an independent Scotland cant repel it!

      • GnosticBrian

        But would the rump of Ireland (the 13 counties) go with their brother Scots or stay with England and Wales?

        • Michael Mckeown

          I dont know but I do know Norther Ireland forced Westminster in to not holding any more referendums on getting rid of them without their permission so its up to them.

          • GnosticBrian

            It is the “who gets to keep the kids” question in this divorce.

            • Michael Mckeown

              Indeed but the thing is the separatists make a great deal of acts being repelled but they themselves nor the SNP can do so and there is nothing to say Westminster cant leave the 1707 act alone and simply create a new act for Scottish independence.

        • Jambo25

          There are 6 counties in NI

    • El_Sid

      If Scotland votes for independence the entity created by the 1707 Acts no longer exists.

      Wrong. If Scotland votes for independence then Westminster begins negotiations on the Act of Disunion 2015, it doesn’t trigger an automatic cancellation of the 1707 Act. The AoD 2015 will be worded in a way that only Scotland leaves.

      • GnosticBrian

        That is most reassuring.

      • allymax bruce

        Dissolution; completely different to what yoos myth-makers are trying to ’embed’!

        • El_Sid

          A yes to the referendum would merely establish that it is the will of a majority of the Scottish people that Scotland should become “an independent country”. How that happens, and what happens to UK laws such as the 1707 AoU are a matter for the Parliament of the UK.

          • allymax bruce

            Already ratified in The Edinburgh Agreement.
            El Campeador: Spain’s secession problems are not iScotland’s. Totally different. DoI is another already situated as a precedent in UK Parliament.

            • El_Sid

              All I see in the Edinburgh Agreement is an commitment to work “in the best interests of the people of Scotland and of the rest of the United Kingdom”.

              Looking at Holyrood’s White Paper, they talk of “additional powers transferred as soon as possible after the referendum, giving the Scottish Parliament the ability to declare independent statehood for Scotland”.

              Holyrood clearly views the mechanics as a declaration of independence from the UK – I think international law would view it as a secession.

              Incidentally, on the national debt the White Paper is quite clear that Holyrood sees Scotland taking on its share of the national debt :
              “a fair allocation of assets and liabilities between Scotland and the rest of the UK ….Negotiations would also agree how to apportion liabilities. Again, equity would be a guiding principle in the negotiations…The Scottish Government will service the share of the national debt allocated to Scotland”

              • allymax bruce

                All you see is what you want to see? As the ‘specifics’ of The Edinburgh Agreement are dependent-upon the Dissolution of the 1707 Act of Union, then the wording is generic; in isogesis form. What you expect to ‘see’ is exegesis, but cannot be until we get the Yes vote. But, Yes, DoI is another path accepted by Westminster Parliament. International Law has no ‘Dissolution’ precedent; only secession precedents; may be why you think that way!

                • El_Sid

                  So it’s not ratified in the Edinburgh Agreement then?

                • allymax bruce

                  Is.

    • Golben Amduke

      No – international law is clear that the seceding entity is the new state and the remainder is the continuing state, so the remainder retains all the state’s rights as respects other states (including treaties, positions in international bodies like the UN, double tax agreements etc) and the new state starts from scratch.

      • GnosticBrian

        Thank you, that is good to know.

      • allymax bruce

        That may be (?) for secession; but the 1707 Act of Union is a document of which dissolution can only be used as an instrument of law; even international law. Which, pretty much makes your comment utterly useless!

        • Golben Amduke

          No sir. There are two reasons: (i) domestic law is interpreted in the context of rights and obligations of international law. As international law posits a remaning state and a new state the remaning Union is treated as a single entity as between the constituents; (ii) NI and Wales are simply not going to take the point!

          • allymax bruce

            Nor Sir right back at ye; I’m not contesting NI & Wales, I’m stating you use the wrong ‘instrument in Law’ when you cite ‘secession’. The 1707 Act of Union will be Dissolved.

      • Jambo25

        The successor state also retains all the liabilities e g National debt.

  • sfin

    Ha! Ha! Ha! Ha! Ha! Ha! Ha! Ha! Ha! Ha!

    • Hello

      That’s a lot of “Ha!’s”. I’m just glad you were making a point.

  • BarkingAtTreehuggers

    What assets? What liabilities?

    OwnGoal Osborne has been outsmarted once again.
    This will not end well will it.

  • Daniel Maris

    No. 1 the Permanent Secretary should never have allowed his advice to be used as a political stilletto. But since he has, he has to defend his advice in public. He can’t hide behind Osborne.

    “The Permanent Secretary doesn’t think it’s a believable threat because
    it would hinder an independent Scotland’s economic credibility, the
    affect on gilt yields is likely to be minimal and any increase in
    funding costs would still be less than an ill-thought out currency
    union.”

    Is this credible? I am not sure. If the markets looked at a newly independent Scotland and saw it was essentially debt free, why on earth shouldn’t they lend to it? For the first couple of years loans might be a bit short term and at higher interest rates, but that would still be a good deal for Scotland. As confidence grew in the government’s ability to repay, so would lending become more normal.

    • CraigStrachan

      I find it refreshing that Osborne has published his advice. When will Salmond be willing to do the same with his advice on the path to EU membership for Scotland?

      Oh, wait, I remember now – he never had any.

      • Michael Mckeown

        Osborne covered all the bases by publishing all the advice he got, whats more to say now, its a no and its staying no.

    • GnosticBrian

      And what of the £180bn debts of Scotland’s toxic banks?

      • ChuckieStane

        Mr Cable wants it all for rUK. In last week’s scare story he said RBS would move to London post-indy.

        • GnosticBrian

          What Dr Cable wants, and what he gets may be two different things.

          • El_Sid

            Surely the future of RBS is a matter for the majority owner of that company?

    • Nicholas chuzzlewit

      Because the ‘ markets’ with whose workings you are clearly unfamiliar will perceive Scotland as a defaulting party and not ‘debt free’. A profligate, leftist SNP will then be faced with either being unable to borrow or to borrow only on the most stringent terms. Stringent by the way, means very expensive and short term. As always, you are trying to sound like the oracle on subjects of which you are clearly ignorant. No debt would also mean no share of the UK assets. have you factored this into your vision of Scotland’s borrowing paradise?

    • Nicholas chuzzlewit

      Oh and there is the small matter of Scotland’s Banks, which last time I looked were not a picture of financial health, operating without a credible lender of last resort. Do you think the markets might factor that into the equation or will it just shrug its collective shoulders and ignore the problem?

      • Andy

        Scotland has a banking sector which is larger than Iceland. If the Scots vote to p*ss off, taking the 41 Fascists with ’em, then Royal Bank of Scotland would have to move to London. As it is RBS should have been broken up.

        • Nicholas chuzzlewit

          Oh I think we should leave it in Scotland. dealing with ££180 billion plus will give them something to do on those cold dark nights.

        • asalord

          Perfect example of the “united” kingdom’s social harmony.

        • Jambo25

          “41 Fascists” Nice.

    • asalord

      Good point,Daniel,about the Permanent Secretary’s statement bring used for political purposes.
      British nationalists have loudly cried foul over accusations against the Scottish government in seeking civil service advice.
      British nationalist hypocrisy has now been exposed by Osborne’s use of civil service advice.
      As ever Westminster thinks civil service rules do not apply to itself.
      Ashtonishing hypocrisy.

      • Damon

        “Join the currency union to underwrite Scottish debt, despite the fact that you said it won’t work, and despite the fact that none of you want it. If you don’t join, we’ll wash our hands of our joint debt. And by the way, stop bullying us.”

        Astonishing hypocrisy.

    • Jambo25

      Exactly. Osborne and co are putting rUK in the position of the ‘Successor State’ and in international law ‘Successor States’ take all the liabilities including national debt. Salmond doesn’t have to repudiate debt. rUK will have done it for him.
      Scotland would then start off with no national debt and no debt service necessary. rUK might well be seen by the bond markets as running fiscal and economic policy on an irrational and emotional basis. If that is the case they will ‘punish’ rUK. Incidentally, with no need to service debt iScotland might well be in a position to drastically lower Corporation and other similar taxes; thus attracting relocation of firms from rUK.

  • telemachus associates

    For once George has done good.
    The only response from the tub of lard possible will seem like vacillation.

    • Daniel Maris

      Well we shall see what sort of people the Scots are. Are they really the money-eyed mice of Osborne’s calculation? Or are they a proud people, with a long history and confidence in their future?

      • CraigStrachan

        A long history in the UK, and confident in their future within it, yes they are.

      • Fergus Pickering

        They are money-eyed mice, old son. Have you never met any Scotsmen? I have and let me give you some advice. Hold onto your wallet. Hint. Would you trust the former head of RBS further than you could throw him?

        • CraigStrachan

          I’ll hold onto your wallet for you, Fergus.

          • Fergus Pickering

            I’ll sit on it thanks. Craig.

            • Wessex Man

              CraigStachen you are a brave man to hold on to anything associated with the Pickle!

              • Fergus Pickering

                Come sir, that is rude and unworthy.

      • Hello

        Or a relaxed, confident sort of people, without insecurities about their chosen allegiances, friendly to the extreme, and content in their aspirations and the means of those aspirations?

        • asalord

          Yep. That’s why they’ll vote Yes.

          • Hello

            It’s not going to happen, old sport.

      • Tony_E

        Or will they react the way that Salmond believes that they will – with the petulance to believe that they can escape their debts and simply stick a finger up at the English with their oil riches by voting yes.

        The Scots I know certainly seem to think this, as they are sharing a video by Ian Hamilton QC that states this clearly.

        The Union is finished – if not now, in ten years time it will come back again. Lets be done with it now.

        • asalord

          Agree with your last sentence.
          Not petulance,though,just a tired recognition that the union – imbalanced since its conception – is now just a subservient mouth-piece for the city of London.

          • Tony_E

            While that might be your opinion (and not necessarily on I would take much issue with), I suggest that you look at what the nationalist politicians in Scotland are actually saying.

            Their appeal is a direct one of ‘We’re going to stuff those English bastards – we going to have all the oil and none of the debt’.

            They knew at the outset that no English political party could eve agree to a currency union, this argument has been manufactured from day one to come to this point. While a break up of the union might be the right thing to do – Alex Salmond is trying to bring it about by making England the enemy, rather than simple a state which has its own quite reasonable interests in a post independence settlement which are just as valid as Scotland’s.

            • allymax bruce

              Well well, Scotland’s First Minister, Alex’ Salmond too clever for all the Westminster sanctimonious gits? Who wooda thunk it!

            • terregles2

              We’re going to stuff those English bastards. I had three people give me YES leaflets at my station yesterday. Two of them were English they didn’t say anything about wanting to stuff anyone.

          • El_Sid

            So which of the party leaders has worked for a bank?

            Who’s the mouthpiece for the bankers?

        • allymax bruce

          “The Scots I know certainly seem to think this, as they are sharing a video by Ian Hamilton QC that states this clearly.” ‘sharing a video’? The Scots I know share an impoverished broken life, and are quite ecstatic at voting Yes for iScotland. The poor don’t need the upper class ‘privileged’ rogues talking for us; we know all too well Westminster, that place that has rendered a caste system into all corners of its Empire, are our worst enemy. And troughers like Unionist politicians, and the Scottish upper class that sold us to the enemy, are no more credited with a right to say what Scotland wants than any of the massive poor in Scotland. Vote Yes to right the wrongs of our Westminster ‘privileged’ rogues, and end poverty in iScotland!

      • Makroon

        There was a poll which supposedly showed that offered a net gain of £500, enough Scots would switch to the NATs to give Salmond a solid majority. But that was a YouGov-Labour poll, so probably just the usual tosh (good Scottish word, that).

    • asalord

      Yes,George done good. His threats will be a boost for the independence movement in Scotland. For that much thanks.

      • Nicholas chuzzlewit

        Yes but what are you going to use for money?

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