Free the lands of the north
Like Boris Johnson, my sense is that Scotland will eventually vote no. But what a kerfuffle we are seeing in the meantime. A once mighty economic and political power stands on the brink of dissolution. Only now is the world, and the markets, waking up to the potentially seismic geopolitical and economic implications.But rather than witter on about the threat to Britain’s place in the world, I want to focus instead on what kind of economy awaits if Scotland does decide to take the plunge.The first thing to make clear is that Scots have absolutely no idea what they are getting into. [Didact: This is actually almost surely true.] I mean this in a literal, rather than a patronising, sense, for virtually all the terms of separation have yet to be negotiated. However, one thing is clear. Whatever the outcome of subsequent negotiations on the terms, it won’t result in the feather-bedded welfare nirvana promised to them by nationalist campaigners. The currency issue alone is what’s going to make this impossible. Scotland is being taken independent on the basis of a false prospectus. What to do about the currency has always been the major flaw in the case for independence, and it remains very much the big deceit at the heart of the Yes campaign. One of the reasons why the polls have been narrowing in favour of a Yes vote is that Alex Salmond, Scotland’s first minister, has been highly effective in convincing voters that Westminster is bluffing over the pound.And up to a point, he’s right. One of the major mistakes made by the unionist establishment is that of lecturing the Scots about what’s good for them. Scare tactics about the pound have only succeeded in further fanning the flames of independence. It was the wrong approach. They should simply have said, you can have the pound if you want, but just be aware of the price. There’s nothing in principle to stand in the way of monetary union with the rest of the UK, even if the leaders of all three main political parties have said they won’t allow it, nor could Westminster stop Scotland unilaterally adopting the pound – so called sterlingisation.But both approaches would deny discretionary monetary policy, would severely limit fiscal and financial independence and would certainly be incompatible with the Scottish National Party’s vision for an independent Scotland, big on welfare and apparently impervious to fiscal constraint.