Among the expressions of togetherness and shared experience between British workers is something we use every day – our currency. And the pound’s stability is under threat from the SNP and its supporters...
The pound is one of the main features that help knit us together as an economy and as a society. Trust in a currency cannot be conjured out of nothing, which is why it does not exist in the eurozone – one of the reasons why that zone is the prison of its member nations.
Photo: shutterstock.com/Adam Gilchrist
But this truth is an anathema to the Scottish National Party. To expose their current stand one need only go back to around January 2009. Just before the euro crisis took hold Alex Salmond appeared on Spanish TV. He predicted that abandoning the pound will prove to be a vote winner in his battle to break up Britain.
In a round of interviews with the Catalan media during a visit to Barcelona, Salmond said to “expand the economy within a monetary context within a European euro context will prove to be a very strong one for the people of Scotland.” Needless to say the recorded series of interviews have never been broadcast here in Britain. Why not? They should be. During the same Spanish visit Salmond’s senior adviser said the SNP “had always recognised the benefits of euro membership”.
A new story
Clearly – and with the full blessing of the euro fanatics in the Westminster Parliament – the early plan was for Salmond to use the euro currency as an expression of Scottish “independence”, as a means to break up Britain. But with the euro now seen as a hideous political construct, the SNP narrative has had to be changed.
This explains why the SNP, their covert Westminster supporters and their little helpers who chair independent commissions (e.g. Sir Kenneth Calman) have been tying themselves in knots over what currency basis they should use in an attempt to break us up.
The latest idea from this bunch using Salmond as a mouthpiece is that in the event of a Yes vote, the Scottish government has said keeping the pound and retaining the services of the Bank of England under a formal currency union agreement is the best option for Scotland and the rest of Britain.
The key words in this statement are “currency union agreement” and “the Scottish government has said”. Any form of currency union is something that the British people have totally rejected with the euro. We were right to do so, as subsequently proven by the euro experience over sovereign debt, financial fragmentation and large divergences in economic performance.
But this experience has presented a problem for Salmond. With the euro now a no-go political area since around 2010, he has been without a currency narrative to use as a lever for break-up. So for 2014 he is wearing a new mask – by demanding that the pound enter a euro-style currency union with Scotland.
Are all British workers able to vote on whether we want a sterling currency union together with the inherent weakening that this will bring about? Well, no – because only a relatively small part of the British population (8.3 per cent) will be able to vote in Salmond’s referendum. During the build-up to the vote in September he hopes to fill the minds of those voting with for example, feudal imagery of “knights of old”, based on 14th-century tribalism, designed to poison a modern-day British industrial and commercial working population.
The SNP demand for a euro-style currency union for the pound is already unsettling capital markets. At the beginning of this year institutional lenders to the Westminster government clearly stated that in the event of break-up a surcharge would apply to future debt to cover the risk of a currency union. So the ultimate cost of servicing Britain’s debt would rise when compared to the current integrated basis.
The highly sensitive gilt (government bond) yield calculations that drive the wholesale debt market also ultimately determine retail interest rates – mortgages, for example. So the direct consequence of monetary fragmentation would be that every British worker would face higher debt interest rates all round.
For example: during the year 2013/14 Britain had to issue £153 billion of new debt (gilts) to which an annual interest rate is applied. In the future new national debt issuance and our personal debt of loans and mortgages would be more costly because of the increased hazard of currency union. According to Salmond this surcharge should be introduced without 55 million of the British population having any say in the matter.
Of course to allay currency fears the SNP now says it will honour Scotland’s share of past and future central government debt (gilts) at rates applying before and after break-up.
But the fact is that at the first opportunity Salmond will attempt to deliver a stab in the back to the rest of Britain. He gleefully reported in 2009 that “as you know sterling is sinking like a stone. It’s now about parity with the euro.”
A further illustration of what the term “stab in the back” means in practice concerns the vexed question of banking. Before 2007 Salmond is on record as saying “the Scottish banks are among the most stable in the world”. How does he now talk about Royal Bank of Scotland (RBS)? After a £10 billion share rights issue that burned in 2007 and £47 billion of debt placed on Britain’s balance sheet – together with ongoing annual losses currently at £8 billion – Salmond now describes RBS as a bank that was run from London. Funny that, because at the 2007 shareholders meeting the RBS directors, many of them Scottish, took their seats to the pumped theme music from Braveheart.
The fact remains that when push came to shove the British working class took on the Scottish bank debt (and add £37 billion of HBOS Bank of Scotland debt to the above) and treated it as a British problem. At its root is Britain’s long-standing balance of payments shortfall. To resolve this will require the rebuilding of Britain, avoiding the political trap that has been set of creating false division by arguing over who owes what north and south. Consider why in 2004, when the government implemented the EU Directive on free movement of labour, we weren’t asked whether we agreed to the loss of control of Britain’s borders. Compare that to now where a part of the British population is being encouraged to put up an internal border between north and south.
So one final question. If the fall of Germany’s Berlin Wall dividing East and West was considered a symbol of freedom, why is it that 24 years later a section of the British population is being cheered on to rebuild Hadrian’s Wall, an historic symbol of a foreign occupying power that at one time divided our forces and resistance?
Clearly the fabric that holds our country together is threatened. Objectively the situation is similar to earlier historic periods which saw various European countries partitioned and split up by way of trumped up referenda organised by local and regional quislings and blessed by appeasers. Salmond talks of the Scottish “small folk” and how he is here to help. The reality is that the attempted break up of Britain has been carefully prepared using a slow recipe. Workers north and south, us “wee folk”, are being cooked a stew that we will choke on unless we spit it out. ■