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  By G.A.Ponsonby
 
In TV broadcasts where the independence referendum is discussed it is not unusual to hear the interviewer suggest to a guest pundit or politician that the Yes campaign needs a game changer; what can they do? they implore.
 
The justification for such loaded questions is usually the opinion polls which indicate a significant gap between support for Yes and No.

As with all election campaigns, it is rarely the clever strategy that can give one side the edge over the other but the unexpected event, the happenstance.  Just such an event happened today when the UK Treasury announced its intention to underwrite every penny of the UK's debt mountain which currently stands at 1.4 trillion pounds.

The Yes campaign didn't need a game-changer, the panic that has engulfed the No campaign since the turn of the year has been evident and growing for some time.

Polls have slowly started moving in the wrong direction as far as the No campaign are concerned as the public have grown impatient waiting for the fabled positive case for the Union.  David Cameron has run a mile when asked to defend the Union in a straight debate with Alex Salmond.

But the Treasury announcement is a massive development in a debate that has lacked certainty.

Currency, like the EU, has been a port in a storm for the No campaign whenever the debate got a bit rough. 

How many times have we heard a senior Unionist politician argue that there will be no currency agreement, no lender of last resort and nothing but the euro for a newly independent Scotland?  Even on the day of the Treasury announcement, Danny Alexander was still claiming that a currency agreement between London and Edinburgh was highly unlikely.

There are several reasons for a currency union - one hundred and thirty billion of them to be precise.  That's how much Scotland would take on in the event of a Yes vote … assuming of course a suitable post referendum agreement with London can be reached.  It's more than Scotland's entire budget for four years - five if you factor in future Westminster cuts.

When Salmond said Scotland's hand had been strengthened with the announcement, he wasn't kidding.  The amount of debt Brown, Darling and Osborne have run up is eye watering and under international law there is absolutely no requirement for an independent Scotland to pay one penny towards it.

The Treasury decision has brought into the open something the Scottish Government's Fiscal Commission said months ago, that all debt accrued by successive UK governments has been done so under the title of the UK Government.

This means that - even if both London and Edinburgh wanted to - the debt cannot be split in order to pass a proportion of it onto a newly independent Scotland.  The debt, all of the debt, is the UKs and that cannot be carved up unless international bond holders agree to it, and they won't.

Even Downing Street admitted that they were now powerless to insist Scotland accepts part of the debt.  Asked how they would compel a newly independent Scotland to take on some of the debt, a spokesman said:

"In the event of a Yes (vote), there would have to be bilateral negotiations involving the UK Government and the Scottish Government."

But the Scottish Government is not washing its hands of its obligations as far as servicing this debt is concerned.  Alex Salmond has made it clear Scotland will shoulder a fair share of the burden.

The quid pro quo as far as the SNP is concerned is a currency agreement between Holyrood and Westminster.  It's an eminently sensible negotiating position that actually serves both parties well.

Salmond always knew it, and now we know it, he has Westminster by the short and curlies.  But this is not a game of pain, neither party has anything to gain from antagonising and hurting the other.  It's why a currency agreement will happen.

A currency agreement sees the UK balance of payments benefit from hard collateral that is North Sea Oil, and the international money markets, whose prompting led to the Treasury making the announcement, take comfort in knowing that all of the UK debt will be serviced in pound sterling with no rancour.  Money markets like consistency and predictability. 

Another factor that make a currency union a no brainer includes the hundreds of millions of pounds of trade carried out by English based businesses with Scottish customers.  Would a government in the rest of the UK deliberately create problems for its own people by introducing barriers out of spite?

Remember that post a Yes vote, the career driven Scots MPs and their bitterness will disappear from Scottish politics.  Scottish and rUK civil servants will sit down and an amicable dissolution of the Union will be agreed.

The Treasury announcement is a sign of common sense and pragmatism.  That it came on the same day that Alistair Carmichael launched his 'top-twenty' reasons to vote No, completely overshadowing it, shows it was not a co-ordinated attempt to help the No campaign.

Money talks and £130bn pounds can make a lot of persuasive noise, especially if the international money markets are listening.

Comments  

 
# theycantbeserious 2014-01-13 22:57
The 'liar' Alex Salmond appears to have been telling the truth all along. Maybe now the apologies will come flooding in from all the unionist parties, the BBC in Scotland and the press.

He will also get the respect he deserves and his correct title First Minister of Scotland, used whenever he is introduced, is quoted or speaks?
 
 
# Will Mcewan 2014-01-13 23:21
The announcement also represents a tacit concession that independence is becoming more likely and that other interests recognise how important Scotland and its resources are to the UK's debt problem.
Once the spinning evaporates this will become plain
 
 
# Breeks 2014-01-14 02:48
My instincts are urging caution. Do we want to be new country? I was quite comfortable with old Scotland terminating a broken down political union with an equal. Why should the matter be decided by the Westminster Treasury? Have we conceded we are a new nation before Europe? I know that is what Westminster wants us to be, but are we doing ourselves an injustice here?
 
 
# govanite 2014-01-14 07:32
Well, it was never going to be a perfect unwinding of 1707, more a step forward. I'll take that, we are more than our history - we will have a future once again.
 
 
# UpSpake 2014-01-14 07:18
This article is quite correct. There is no obligation upon Scotland whatsoever to take on any UK originated debt.
Whilst the profilgate Westminster government of all persuasions loaded debt upon debt it was done with no consultation whatsoever with the Scottish Government. We had no voice.
However, that same International Law quite clearly states that the mother country cannot enslave the emerging new State with any debt obligations post the date the country expressed a desire for self-determination, that was May 9 2011.
So any debt that a newly independent Scotland might choose to negotiate with London about can only be debt accrued up to that date and not beyond.
 
 
# Macart 2014-01-14 07:55
Well who knew?

Pretty much most of us in the YES campaign for the past two years.

The other shoe was always going to drop on this game of chicken. It was a matter of timing and who could hold out the longest. The Scottish government or the Westminster exchequer? Guess who blinked first? :)
 
 
# Leswil 2014-01-14 09:16
I think that Alex Salmond, being an economist,knew this day would come. He knows the markets require certainty, and I am sure, for him, this just had to happen as soon as stakeholders asked for it.

Hence the treasury having to "do something" and that is what has produced this. From here A. Salmond can manipulate the situation to Scotland's favour, knowing full well that we actually do not need to pay anything.

At the same time rUK will be desperate to pay the money back to them. However if for whatever reason we don't. then the pound will crash as bond holders walk away, knowing that the UK is going to have to find all the money after all.

As I say, A. Salmond has played a blinder I am glad he is on our side.
 
 
# call me dave 2014-01-14 10:16
Last nights demolishing of Lord McFall by the businessman from Scotland Mr Kemp. (he's the one with the braw suit). 2mins in for those that are in a hurry.


news.stv.tv/.../...
 
 
# RTP 2014-01-14 10:50
[quote name="call me dave"]Last nights demolishing of Lord McFall by the businessman from Scotland Mr Kemp. (he's the one with the braw suit). 2mins in for those that are in a hurry.

Have just watched it and I always thought McFall had a very good grasp of what he was speaking about,but,last night he was all over the place and was really left floundering by Mr Kemp.I intend watching it again.
 
 
# Henderson 2014-01-14 11:08
Lord McFallacy shown up for lack of knowledge (yet again) on area he is supposed to regulate on. What acomplete waste of space never mind money Tony's 'Placemen Peers' are.

Sell Scotland short at every opportunity.Labour are in so deep with the Tories now its hard to tell them appart. The mans lust for Tory policy is palpable !

Shame on Labour.
 
 
# theycantbeserious 2014-01-14 11:36
The power of Scottish Tweed, well done Gordon very clear and concise even when talking over his lordship! I thought McFall was going to burst into tears at not getting an easy ride. Excellent!
 
 
# rodmac 2014-01-14 11:48
My take on it, plus links to figures.

.../debt-free
 
 
# Breeks 2014-01-14 11:51
I am not persuaded there is no obligation on Scotland. No legal or binding obligation perhaps, but I feel we do have some moral obligation to shoulder our fair share, if for no other reason than we will have to get along with the English people for many generations to come, and not accepting our share will brand their flesh with resentment forevermore.

I have a bigger problem with the debt being conditional upon our share of assets. Or right to a share of the assets should not be bound in any way to the UK debt. Why? Suppose there was no UK deficit, wouldn't an independent Scotland be entitled to it's share of UK assets? Of course it would.

The awkward elephant in the room is that Scotland could legitimately trade this legitimate share of assets to reduce our capital debt. OK, same difference maybe, but if we do not accept our share of the debt in principle, we badly compromise our interests when negotiating our share of assets.
 
 
# Leader of the Pack 2014-01-14 12:29
The treasury has inadvertently crushed its own "Project Fear" scaremonger regarding a shared currency arrangement as the shared "serviced" debt arrangement wouldn't work with different currencies employed between Scotland and the rUK due to the daily fluctuation between the respective values of the currencies. The Westminster Government will now be forced to admit that they will have to get into a shared currency arrangement with Scotland in order to allow this proposal to work.
 
 
# mountaincadre 2014-01-14 13:36
Is it just me or does this have a wiff of successor state about it, this needs to be played very carefully.
 
 
# Macart 2014-01-14 15:31
Well yes. However clean slate is probably contestable by any rUK since they are not a signatory of that particular motion in the Vienna Convention. But the clean slate precedent is recognised and accepted within international law.

In the case of walking away debt free what you would have is a prime signatory of the UN charter and Vienna Convention (supposed upholder of international law) attempting to fight a case over which there already exists international rulings. They could as I say contest for the debt but they'd become an international joke and pariah. On the other hand this is not the scenario the SG wish to pursue and certainly one which rUK reliant on certain immovable assets wish to pursue. It'll come down to politicking and negotiation in the end.
 
 
# RTP 2014-01-14 15:45
O/T but I thought NNS and all would like to have a listen and look at this.

energyvoice.com

•Shell: Peterhead CCS project first step to stopping climate change
 
 
# millie 2014-01-14 17:41
RTP, that’s a very interesting piece about the Peterhead CCS public consultation.

This link is also interesting-
www.gov.uk/.../

It would appear that the White Rose Project/Drax has been given substantial funding from the UK Government (9th Dec 2013). This is in addition to the possible £1b competition funding.

Let’s hope the UK Government is genuinely enthusiastic about Peterhead too.
 
 
# call me dave 2014-01-14 17:31
Wee snippet from GMS.

Mr D. Buich? from Panmuir Gordon stockbrokers, opines but very negatively and gets his facts wrong about Scotland's ability to have a good credit rating.

Luckily Mr Kerevan and, to some extent, Mr Clegg? (no not that one),from the Daily Record paper puts the record straight shortly after.

Starts 1hour 35mins and 45secs in.

Worth a listen for 11 minutes. The truth emerges...

www.bbc.co.uk/.../b03nhs2h
 
 
# millie 2014-01-14 18:14
That was a good listen, call me dave-

I wonder if it is this Mr David Buik!-
davidbuik.wordpress.com/.../...
 
 
# call me dave 2014-01-14 18:44
Judging by the rhetoric I think you have him.

PS.

In all of the hassle since yesterday has the dynamic duo Cameron or Osbourne made a quotable comment on all this?

Maybe Alexander , Darling & Carmichael are told to say NO but leaving the stage open for later so Cameron (the man from London)to say, "Me... I never ever said NO, but now a currency union seems to be common sense. So YES!... ooer"
 
 
# martin morrison 2014-01-15 16:22
Millie - qualified thanks for this link. Not sure if it did much for my digestion, but it's certainly top drawer rantage.
 

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