Will the UK press catch up with Scotland’s Currency debate? Gordon MacIntyre-Kemp | 29/11/2013 | The ranks of the metropolitan media continue to pronounce on Scotland’s referendum from afar. They are not engaging with the debate outside the London bubble, lecturing rather than listening and some even fall into the trap of regurgitating No Campaign press releases. Even the better ones like highly regarded commentator Martin Wolf of the Financial Times seem to be lagging behind. Many journalists north and south of the border are only asking questions about the future after a Yes vote. But the choice next year is between two futures for Scotland both of which involve change. After all, change is a constant. There is no such thing as the status quo. Flat earth UK news What ever happened to the forth estate? Have they become so poorly resourced and addicted to the easy reworking of press releases or briefings from those they are in proximity to that even the last few free thinkers are losing their edge? To quote a famous independence campaigner: “The man who reads nothing at all is better educated than the man who reads nothing but newspapers” ~ Thomas Jefferson. Some articles are so off the mark that I feel the need to respond, so here is an “Open Letter to Martin Wolf of the Financial Times”. Open letter to Martin Wolf of the Financial Times Earlier this month Financial Times commentator Martin Wolf wrote a column on the subject of independence in which he suggested an independent Scotland should not be allowed to remain the currency union with the rest of the UK. Business for Scotland responded in writing and an abridged version of the letter below was printed by the Financial Times on 14th November. “Dear Sir, I have to respond to Martin Wolf’s commentary of 8th November “Scots cannot ditch England and keep its central bank”.First, no one is breaking away. Many of the unions and common structures which bind together the peoples of Britain will remain after Scotland votes Yes, including the union of the crowns, the defence union through Nato, Scotland’s membership of the European Union, a common financial services market and regulatory regime, Scotland’s place in the Commonwealth and the British social union of friendships and family ties.Secondly, The Bank of “England” is a misnomer, it is in actual fact the Bank of the United Kingdom, which is a partnership of equals in which the central bank and Sterling are a jointly held asset to which Scotland is entitled to its share. It was of course founded by a Scot, William Paterson. Over the last 32 years, Scotland has paid £64bn in interest servicing the UK’s national debt accumulated exclusively by the rest of the UK. If Scotland had become independent in 1980, it would have now generated a cumulative surplus including a conservative 4% interest rate of £50bn, including our share of the banking bailout and all the same spending mistakes of Westminster like the Iraq War. Despite this, the Scottish Government proposes in the interest of mutual cooperation and in recognition of ongoing economic interdependence that Scotland will assume its population share of the UK’s debt. On the basis, of course, that Scotland gains its fair share of assets. Thirdly, the rest of the UK needs Scotland to remain in the currency union. Scottish exports are pivotal to rUK’s balance of payments and by extension the future strength of Sterling. The rest of the UK has a trade deficit, Scotland does not. Likewise, Scotland is rUK’s second largest trading partner, £60bn worth of trade north and south of the border supports up to 700,000 jobs in England alone – trade barriers anyone? There are many but the main difference between the Eurozone and a British currency union is that productivity north and south of the border is almost identical. We know the Treasury at the direction of their political masters are going to publish more scaremongering, around the impracticalities of a new treaty reforming the currency union. Martin has presented only one side of the argument and in debate after debate in Scotland that negative and incorrect argument is being defeated convincingly. In the end, however, economic interest always prevails over politicking. What the UK Government say before the referendum is quite different from what the politicians will agree after a Yes vote, then the goal will be to reach an agreement that represents mutual gain. Given Westminster’s lamentable record on borrowing and spending, Scotland will of course be insisting on prudent fiscal parameters for both partners if we are going to allow the rest of the UK to share a currency with us in future. Never again will Scotland allow its financial strength to be undermined by policy decisions in London which have, most symbolically, led to the loss of Britain’s triple AAA credit rating. A central bank and common regulation for the ongoing common financial services market also makes sense. The commercial banks to which Martin Wolf refers were in the case of HBOS based in Halifax and in the case of RBS experience 80pc of its peak losses in London, both regulated of course by Westminster. In fact, financial services are a larger part of the UK economy at 9.6% of GDP than they are of Scotland’s where they account for only 8.3% of GDP. The banking bail-outs were international in nature, including £285bn for RBS and £552.32bn for Barclays from the American Federal Reserve. What mattered was the location of contagion, not the headquarters postcode. Finally, the independent Scottish Fiscal Commission Working Group of leading international economists, including two nobel laureates, worked with Bank of England officials last year to produce a practical framework for the continuation of the currency union. We know it can and will work because some of the best minds in the field tell us so. The most significant benefit of the currency union’s reform will be an increased imperative on the central bank to set policy in the interests of not just the City in the short-term but the entire island of Britain for the sustainable long-term. Scottish interests do not practically factor at all in UK monetary policy at present (despite the Bank of England’s local agent model). Under the new terms of the continuing currency union the needs of the rest of the UK outside London and the South-East will be more influential. This change will help address the North v South structural problems with Britain’s economy. Changes for the better are coming and the sooner the better. Scotland which as a UK founding partner is forcing necessary change to the United Kingdom to create a rebalancing in Britain’s economy by sector and geography, healthy competition, increased exports, higher productivity, better policy-making and sustainable economic growth. Scotland means business, change is non-negotiable and when the people of Scotland vote Yes next year Scotland’s economy will thrive. Gordon MacIntyre-Kemp Chief Executive Business for Scotland
Posted on: Sun, 01 Dec 2013 11:27:48 +0000
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