ALEX Salmond is standing his ground and
refusing to name a Plan B for Scotland’s currency after independence, despite
mounting criticism of his leadership and unprecedented pressure from his
opponents.
Amid growing unrest among his own supporters
and a slump in the polls, the First Minister is refusing to back down on his
policy, which will be given a final seal of approval by his hand-picked group
of economic advisers next week.
Last night there was no sign of the issue going
away when leaders of the three opposition parties at Holyrood wrote to Salmond
demanding that he sets out a Plan B, arguing that his proposal for a formal
currency union with the rest of the UK is “impossible”.
Labour, the Conservatives and the Liberal
Democrats have said an independent Scotland will not be entitled to insist on a
formal currency union – sharing the pound and the Bank of England with the rest
of the UK.
Salmond’s failure to deal with Alistair
Darling’s criticisms of his currency plans during last week’s STV televised
debate has led to discontent within the Yes movement and support for
independence falling in the polls.
His display has also encouraged the No campaign
to concentrate even more of its efforts on attacking his currency plans,
sensing a fatal flaw.
Further Reading here:
The
Five Tests for a Currency Union
“An
independent Scotland would keep the pound because it’s our currency and it
would be in the interests of the rest of the UK to agree to currency sharing.
But if the rest of the UK won’t agree, an independent Scotland would punish it
by repudiating its pro rata share of UK debt.
For
the avoidance of doubt, Scotland’s Finance Secretary John Swinney told BBC
Radio Scotland last week that failure to agree a currency union would “absolve
the Scots of a £120 billion share of UK debt, which translates into an annual
cost of £5bn a year”.
There
are other things into which this would “translate”, as Angus Armstrong of the
National Institute for Economic and Social Research pointed out last week. If
it is this easy to walk away from debt obligations, secessionist movements in
Europe would jump at the precedent. How might Scotland’s EU application stand
then?
Yes,
it would remove a hefty burden from our shoulders. But an independent country
that began life with debt repudiation would find it could not raise money in
international markets without lenders demanding substantially higher interest
rates. Scotland’s credit rating would be rock bottom.”
The
Fiscal sustainability of an independent Scotland
“Scottish politicians seem as unwilling as
Westminster to tell voters they must pay Scandinavian taxes if they genuinely
want a social democratic future…. Are the people of
Scotland genuinely willing to tax themselves towards social democracy?”
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