SCOTLAND DOESNT NEED A PLAN B ON CURRENCY. CURRENCY UNION WILL BE MAINTAINED, BUT WHY....? Osborne cant force a plan B on Scotland as the currency is not only joint owned but in the best monetary and fiscal interests of Westminster. His lip service to the NO campaign only serves to expose the desperate desire to maintain the POLITICAL union. With that they have the continued authority to cover up, conceal, and gag people, and lie about Scotland, Wales, and Northern Irelands contribution to Westminsters Treasuary. The truth is that Sterling hasnt crashed because it still, presently, benefits from Scottish exports contributing to the UKs overall balance of payments. Upon Scottish indy the UK can agree to a Sterling Zone currency union or it can reject it. If it rejects a Sterling Zone currency union then Scotlands exports will no longer contribute to the rUKs balance of payments, resulting in the rUK BoP deficit doubling from around 5% to around 10% of GDP. An overnight doubling of the rUKs BoP deficit would be catastrophic for sterling and, in all likelihood there would be a run on the pound as the money markets attempt to dump Sterling. To mitigate this the rUK Treasury will hike interest rates in an attempt to stabilise the currency but it will fail just as it failed during the infamous Black Wednesday. In short, the pound needs Scottish exports (Oil/Gas, fisheries, whisky etc) to help keep down the BoP deficit. Also, after indy Scotland will negotiate its fair share of the UK debt (minus assets). This debt will be repaid to the UK Treasury, not to the money markets. It is inconceivable that the rUK would wish that debt to be paid back in anything other than the pound Sterling thereby, ipso facto, bringing about a currency union. Finally, why would the rUK Government wish to inflict transactional costs for businesses in rUK to do business with its second biggest trading partner when there is a viable way to avoid such additional overheads? The rUK can, of course, reject a Sterling Zone. If it does that then it will be blowing two big holes in its feet. I suspect, however, upon a YES result in the indy referendum common sense will prevail and a pragmatic solution will be sought. Its too hard to believe that the UK chancellor of the exchequer seriously asking us to believe that he is contemplating damaging the entire UK economy following a yes vote? Does he think English company bosses will accept the millions of pounds of extra costs that tariffs would entail, not to mention the VERY SHARP downward tilt in the balance of payments without oil receipts and how the money markets, as said, would react? There are about 400,000 English people resident in Scotland who will be livid that a UK government has just made it harder for them to travel back and forth to see their families, and all because of a fit of pique that, in a democratic vote, the Scots voted to run their own affairs. Scotland is Englands second biggest trading partner; Osborne choose to ignore this vital fact pertaining to Englands financial health. Scottish oil revenues, businesses, institutions and ordinary workers have worked hard for sterling and contributed to its strength in this currency Union that benefits the English economy very greatly, as it stoped interest rate hikes on mortgages on both sides of the Border by the BoE. As Osborne and Carney wont want Scotland to take a plan B as this also means substantial transaction costs, on £60bn worth of trade totalling £700m, this pragmatic solution is a Sterling Zone. Its every bit as much of a benefit to the rUK as it will be to indy Scotland. #indyref #voteno2014 #bettertogether #YESSCOTLAND
Posted on: Sun, 02 Mar 2014 04:41:35 +0000
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