IT'S only the second week of 2009 and I have to ask, has Alex Salmond put his first foot in his mouth already? He has been telling Catalonian broadcasters that an independent Scotland would dump the Pound Sterling and adopt the euro, saying the Pound was "dropping like a stone" (it later recovered that very same day).
What would be so independent about Scotland having a foreign currency instead of our own? I'm not alone in believing that abandoning the pound for the euro would be bad for Britain and even worse for Scotland. In fact, opinion polls show Salmond is c
ompletely out of step, with more than 70 per cent of people against Britain joining the euro – and no perceptible difference in Scotland.
The devaluation of the pound against most currencies, but in particular against the euro, will help Britain trade its way out of recession quicker than say Italy or France – and if it encourages more Brits to stay at home for holidays instead of going abroad, then that will be good for the domestic economy too.
If Scotland were to have the euro, as Alex Salmond recommends, we would have higher interest rates with higher charges for borrowing and be paying more for our mortgages than if we retained Sterling. The bottle of Irn-Bru made in Glasgow would become more expensive than a bottle of Tizer made in Manchester – although both would be made by Barr – and similar Scottish produced goods would become less attractive against English competition. Furthermore, Scottish goods would suddenly start to price themselves out of Scotland's biggest export market – England!
The Irish and Spanish, as members of the euro, were powerless to adjust their interest rates that encouraged a speculative property bubble and are now paying the penalty with a property crash. It is noticeable in Germany the property boom did not happen – because the interest rate was set to suit Germany and mitigated against such property inflation.
We in Britain witnessed our own property boom because the Bank of England used a measurement of inflation (introduced here by Gordon Brown) that was designed to suit the euro by not including the cost of property. Had we continued with our own system of measurement the property debt would have undoubtedly have been smaller and the bust easier to handle.
There are, in fact, many, many economic arguments about why the euro would be bad for Scotland and that, were we independent, we would be better with our own currency tied to the Pound Sterling.
The chief argument against Scotland joining the euro is not, however, economic, but political. There is no doubt that Scotland, through Scottish politicians, bankers and financiers has far more influence over the British Government Treasury and the Bank of England than it would have over the European Central Bank in Frankfurt.
It is no coincidence that the ECB is located in Frankfurt – for it is Germany that calls the shots. Any worries that London is out of touch with economic realities beyond its M25 ring road would be multiplied tenfold. Frankfurt bankers have to run a one-size-fits-all euro for all the countries but use the German economy as the chief barometer by which to set policy.
So why achieve independence and supposedly get the nation's collective hands on those levers of power that are supposedly denied to us – only to ask the Germans to pull them for us?
The euro project is the antithesis to Scotland becoming a sovereign independent nation. Whatever one thinks of independence, taking control away from London – where we have influence – to give it to Frankfurt – where we do not – just does not make sense.
It can only get betterGordon Brown is discovering that his provision of £37 billion of bank capital has failed to improve lending and is now considering pumping yet more of our money into the institutions. That would be an embarrassing admission of failure.
Alistair Darling is meanwhile admitting that his overly optimistic predictions that Britain would pull out of the recession by the third quarter of this year were wrong and is now considering a later date, probably in 2010.
That would be an embarrassing admission of failure.
So much for saving the world, neither Flash Gordon nor Mystic Meg can be relishing 2009 – but then again, after such an embarrassing year maybe things can only get better.
Where is evidence?At the end of last year's parliamentary session the SNP Justice Minister, Kenny MacAskill, was urging the Parliament to introduce far more strict drink-drive limits, saying that the public was ignoring the law and that it would save lives, despite a lack of any evidence to back up his claim.
This week the figures for the Christmas and New Year drink-drive campaign in Scotland showed a drop in arrests from 654 to 839.
Clearly the public is behaving better. Might MacAskill, who as a mere MSP was once detained by the Metropolitan Police for overindulging on his way to Scotland football match, give the public an apology?
I won't hold my breath.
The full article contains 859 words and appears in Edinburgh Evening News newspaper.
