If Scotland became independent... (sale, 2015, lender)
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If it's all the same to you I'd much rather pay 5% interest on a £5Bn loan than 2.7% on a £97Bn loan!
You will be lucky if it is just 5%. But I don't think Scotland would renege on its share of the debt because the consequences in terms of the relationship with the rest of the Uk and possible sanctions would be too severe.
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Originally Posted by Eoin (pronounced Owen)
In Geneva and Basel in particular, where tens of thousands of people live in France or Germany, but work in Switzerland, queues at the border have long been a source of irritation.
I worked right on the border. The 'Frontaliers' had a fast lane which mean't no queues. And Switzerland just voted to re-establish immigration quotas.
Given Irelands small population, the net migrants figure represents a fairly small number. Interestingly, 300,000 Irish have emigrated in the last four years following the economic meltdown. This, of course, was a country that the nationalists sought to emulate.
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Originally Posted by Eoin (pronounced Owen)
Contrary to what you've been mis-led to believe, no such clarification has been given. You may be confusing the personal remarks of Jose Manuel Barroso as being an actual decision. The question of Scottish membership is likely to be based on legal advice, and therefore not in the gift of Mr Barrosso to dictate. Fortunately we will have the answer far in advance of the referendum as the Herald reports:
Would this be the same fictitious legal advice that Alex Salmond claimed to have? We already know the EU position. Scotland will be treated as a new entrant. Just because you don't want to hear it doesn't make it untrue.
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Originally Posted by Eoin (pronounced Owen)
You've somehow managed to warp this discussion. We're discussing the Schengen agreement. Countries want to be a part of the Schengen agreement, even countries like Norway and Switzerland which aren't even in the European Union joined Schengen for the benefits it offers them. Somehow you have contorted this fact into a vaccuous argument that giving Scotland an opt-out of Schengen is somehow treating Scotland better than other accession countries. It is not treating Scotland better, these countries want to be in Schengen. These countries had referendums to join voluntarily. Schengen is not some sort of wicked punishment imposed upon them by the EU. It makes sense for these countries to be Schengen because their neighbours are in Schengen. You will note that is precisely the reason that it makes no sense for Scotland to join it! Because our closest neighbours are not!
Joining Schengen is required for new entrants to the EU. Scotland will be a new entrant and will be expected to join Schengen. You cannot be in both the CTA and Schengen. If Scotland joins Schengen then there will be border controls with the rest of the UK and Ireland.Personally, I think Schengen is a good thing.
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Originally Posted by Eoin (pronounced Owen)
The word you're looking for is monetary sovereignty. (Fiscal = Taxes/Spending.) You may wish to note that Westminster "surrendered" monetary sovereignty to the Bank of England in 1997, just as the US Government "surrendered" monetary sovereignty to the Federal Reserve, and Euro members "surrendered" monetary sovereignty to the European Central Bank. It's really grasping at straws if you want to call that a "surrender". These are powers that national governments across the world have granted to their central banks, Scotland would be no different.
Eoin
Except that Scotland would be 'granting' that authority to an organisation whose primary responsibility is to the rest of the UK. Spin it any way you want, if Scotland wants to use the pound then she will have to toe the UK line.
If I remember correctly there was a referendum on the electoral system in 2011. 67.9% of Brits voted to keep the existing system. In Scotland, 63.64% voted to keep the existing system. Those are the facts and they contradict your assertion of widespread dissatisfaction.
I don't believe the results of the AV referendum have any bearing on anything I have said. The Lib-Dems ran at the last General Election on the promise of a referendum on proportional representation - specifically a Single Transferable Vote (STV). On the basis of this campaign they did considerably better than in the past in Scotland. In an STV system there are multi-candidate constituencies, and the number of candidates elected is much more representative of the popular vote. i.e. If 30% of people vote for a party, then roughly 30% of seats in parliament will be allocated to that party.
The Tories refused a referendum on STV, agreeing only to a referendum on an Alternative Vote. An Alternative Vote (AV) system is not a proportional system and retains FPTP constituencies. It would have made no practicable difference to the outcome of elections, it would merely have seen the Lib-Dems gain small number of additional seats. The BBC reports findings of a study showing precisely this:
I put it to you that if you do not recognise the widespread dis-satisfaction in Scotland with the current Westminster setup, then you are out of touch with popular opinion.
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You will be lucky if it is just 5%. But I don't think Scotland would renege on its share of the debt because the consequences in terms of the relationship with the rest of the Uk and possible sanctions would be too severe.
The UK's national debt is guaranteed by Westminster regardless of what happens in the independence referendum. (1) No investors will lose out on money if the Scottish Government reneges on its debt, it would be rUK taxpayers who would be left with the bill; just as it would be Scottish taxpayers who would be left with the bill if Westminster decided to play hardball. You make the claim that investors would demand 'punitive' interest rates, and I agree that in the short term those interest rates may be higher as Scotland would be an unknown quantity. What you've manifestly failed to acknowledge is that in these circumstances Scotland would be a country with a national debt of zero and a GDP per capita higher than the UK it had just seceded from. Greece, a country which investors can be almost certain will have to restructure its debt, pays a 10 year bond yield of 7.6%. When I say 5% for an independent Scotland, I am being gratuitously generous to your point of view. Furthermore, regardless of what the initial rate of interest was necessary, it would rapidly diminish as Scotland would have absolutely no problem in financing its debt, particularly if that opening national debt was zero!
Secondly, if you know half as much as you imply you do about finance; then you will realise that without North Sea Oil and gas and Scottish whisky exports, Sterling (which already has a huge balance of payments deficit) would see an even greater deficit, resulting in a significant de-valuation of Sterling. All those investors (/Russian oligarchs) whom successive UK Governments have lured to the UK with the promise of price stability would hemorrhage out the door once it was clear their Sterling investments would significantly devalue. It's barely an option for Westminster to refuse Scotland use of Sterling, even without the threat of Scotland reneging on the debt. I therefore disagree with your assessment as to who holds which cards in the negotiations.
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Given Irelands small population, the net migrants figure represents a fairly small number. Interestingly, 300,000 Irish have emigrated in the last four years following the economic meltdown. This, of course, was a country that the nationalists sought to emulate.
You've mis-understood the figures I presented you with. I provided you with the number migrants per capita. What they show is that the Republic of Ireland has net migration almost 3 times greater than the UK. You argued that the rUK may impose border controls on the border with Scotland, even if Scotland was not within Schengen; because you stated that we will have relaxed immigration rules compared with the rUK. What the figures show, is that Ireland had considerably greater immigration than the UK in 2005, yet the UK Government did not lift a finger to prevent this so-called "back-door" immigration into the UK.
Secondly, you will note that the Republic of Ireland has higher GDP per capita than the UK. It has less disparity of wealth than the UK. Regardless of its recent financial problems, Ireland has emerged from the Eurozone bailout process and is still a wealthier and more prosperous country than the UK. For you to imply otherwise is disingenuous. Certainly Ireland has its problems, but Scots would be wealthier in Ireland (both in real terms and in relative terms) during the bust years than in the UK during the boom years.
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Would this be the same fictitious legal advice that Alex Salmond claimed to have? We already know the EU position. Scotland will be treated as a new entrant. Just because you don't want to hear it doesn't make it untrue.
Could you explain why, if this information is known, that MEP's have asked for the EU's lawyers to clarify the position? I'll tell you what, you tell me unequivocally that an independent Scotland will not have its EU membership fast-tracked, and tell me unequivocally that Scotland will be required to join Schengen; and we'll re-visit this subject in a few weeks once the legal advice has been published. Only one of us here is writing cheques they can't cash.
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Joining Schengen is required for new entrants to the EU. Scotland will be a new entrant and will be expected to join Schengen. You cannot be in both the CTA and Schengen. If Scotland joins Schengen then there will be border controls with the rest of the UK and Ireland.Personally, I think Schengen is a good thing.
I agree that in principle Schengen is a very good idea. If the UK would join it I would be overjoyed as an independent Scotland could join it also. However, it is not a good idea if it means introducing immigration controls where none currently exist; because that is the very anti-thesis of the purpose behind Schengen - a point you seem loathe to address.
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Except that Scotland would be 'granting' that authority to an organisation whose primary responsibility is to the rest of the UK. Spin it any way you want, if Scotland wants to use the pound then she will have to toe the UK line.
The Bank of England's mandate is to keep the inflation rate as close to 2% as possible. If a packet of crisps costs 50 pence in Carlisle, and £1 in Gretna, then people will buy the crisps in Carlisle and sell them in Gretna; until price equilibrium is reached and the crisps cost more or less the same in both places. That is called arbitrage and it is the mechanism by which prices are made broadly equivalent from place to place.
Therefore, when you say that, "Scotland would be 'granting' that authority to an organisation whose primary responsibility is to the rest of the UK", you're really grasping at straws. It makes no practicable difference which part of the UK the bank is "primarily concerned" with because the consumer price index will be broadly equivalent across the rUK and an independent Scotland.
What you're trying to package as a "loss" of sovereignty, is the fact that Scottish banks would have to continue to be regulated by the Bank of England, to prevent a 'moral hazard' emerging where Scottish banks were permitted to take greater risks than those in the rUK. This supposed "loss" of sovereignty, is a "loss" which the UK and other developed nations have self-inflicted by delegating the powers to independent central banks; therefore I'm struggling to comprehend your point.
I don't believe the results of the AV referendum have any bearing on anything I have said. The Lib-Dems ran at the last General Election on the promise of a referendum on proportional representation - specifically a Single Transferable Vote (STV). On the basis of this campaign they did considerably better than in the past in Scotland. In an STV system there are multi-candidate constituencies, and the number of candidates elected is much more representative of the popular vote. i.e. If 30% of people vote for a party, then roughly 30% of seats in parliament will be allocated to that party.
The Tories refused a referendum on STV, agreeing only to a referendum on an Alternative Vote. An Alternative Vote (AV) system is not a proportional system and retains FPTP constituencies. It would have made no practicable difference to the outcome of elections, it would merely have seen the Lib-Dems gain small number of additional seats. The BBC reports findings of a study showing precisely this:
I put it to you that if you do not recognise the widespread dis-satisfaction in Scotland with the current Westminster setup, then you are out of touch with popular opinion.
The UK's national debt is guaranteed by Westminster regardless of what happens in the independence referendum. (1) No investors will lose out on money if the Scottish Government reneges on its debt, it would be rUK taxpayers who would be left with the bill; just as it would be Scottish taxpayers who would be left with the bill if Westminster decided to play hardball. You make the claim that investors would demand 'punitive' interest rates, and I agree that in the short term those interest rates may be higher as Scotland would be an unknown quantity. What you've manifestly failed to acknowledge is that in these circumstances Scotland would be a country with a national debt of zero and a GDP per capita higher than the UK it had just seceded from. Greece, a country which investors can be almost certain will have to restructure its debt, pays a 10 year bond yield of 7.6%. When I say 5% for an independent Scotland, I am being gratuitously generous to your point of view. Furthermore, regardless of what the initial rate of interest was necessary, it would rapidly diminish as Scotland would have absolutely no problem in financing its debt, particularly if that opening national debt was zero!
Secondly, if you know half as much as you imply you do about finance; then you will realise that without North Sea Oil and gas and Scottish whisky exports, Sterling (which already has a huge balance of payments deficit) would see an even greater deficit, resulting in a significant de-valuation of Sterling. All those investors (/Russian oligarchs) whom successive UK Governments have lured to the UK with the promise of price stability would hemorrhage out the door once it was clear their Sterling investments would significantly devalue. It's barely an option for Westminster to refuse Scotland use of Sterling, even without the threat of Scotland reneging on the debt. I therefore disagree with your assessment as to who holds which cards in the negotiations.
You've mis-understood the figures I presented you with. I provided you with the number migrants per capita. What they show is that the Republic of Ireland has net migration almost 3 times greater than the UK. You argued that the rUK may impose border controls on the border with Scotland, even if Scotland was not within Schengen; because you stated that we will have relaxed immigration rules compared with the rUK. What the figures show, is that Ireland had considerably greater immigration than the UK in 2005, yet the UK Government did not lift a finger to prevent this so-called "back-door" immigration into the UK.
Secondly, you will note that the Republic of Ireland has higher GDP per capita than the UK. It has less disparity of wealth than the UK. Regardless of its recent financial problems, Ireland has emerged from the Eurozone bailout process and is still a wealthier and more prosperous country than the UK. For you to imply otherwise is disingenuous. Certainly Ireland has its problems, but Scots would be wealthier in Ireland (both in real terms and in relative terms) during the bust years than in the UK during the boom years.
Could you explain why, if this information is known, that MEP's have asked for the EU's lawyers to clarify the position? I'll tell you what, you tell me unequivocally that an independent Scotland will not have its EU membership fast-tracked, and tell me unequivocally that Scotland will be required to join Schengen; and we'll re-visit this subject in a few weeks once the legal advice has been published. Only one of us here is writing cheques they can't cash.
I agree that in principle Schengen is a very good idea. If the UK would join it I would be overjoyed as an independent Scotland could join it also. However, it is not a good idea if it means introducing immigration controls where none currently exist; because that is the very anti-thesis of the purpose behind Schengen - a point you seem loathe to address.
The Bank of England's mandate is to keep the inflation rate as close to 2% as possible. If a packet of crisps costs 50 pence in Carlisle, and £1 in Gretna, then people will buy the crisps in Carlisle and sell them in Gretna; until price equilibrium is reached and the crisps cost more or less the same in both places. That is called arbitrage and it is the mechanism by which prices are made broadly equivalent from place to place.
Therefore, when you say that, "Scotland would be 'granting' that authority to an organisation whose primary responsibility is to the rest of the UK", you're really grasping at straws. It makes no practicable difference which part of the UK the bank is "primarily concerned" with because the consumer price index will be broadly equivalent across the rUK and an independent Scotland.
What you're trying to package as a "loss" of sovereignty, is the fact that Scottish banks would have to continue to be regulated by the Bank of England, to prevent a 'moral hazard' emerging where Scottish banks were permitted to take greater risks than those in the rUK. This supposed "loss" of sovereignty, is a "loss" which the UK and other developed nations have self-inflicted by delegating the powers to independent central banks; therefore I'm struggling to comprehend your point.
I'm not going to bother answering each of your points in turn because we are just going around in circles. However, the Nationalist threat to renege on debt is, in my opinion, an empty one. The consequences in terms of international reputation and retaliation from the rest of the UK would just be too great.
We can agree to disagree on the electoral system. I will rest my case on the referendum held just a couple of years ago.
Like many Nationalists, you make much of oil and whisky. In fact, Scotland's wealth tends to be overstated. While the economy does benefit from North Sea oil, a significant proportion of Scotland's domestic economy – particularly in oil, drinks, energy, and financial services – is owned by overseas stakeholders. In terms of the overall UK economy, oil and Whisky represents around 5%. Indeed, total tax receipts from oil production is only round 2.5% of the whole. The UK economy is far less dependent on oil and whisky than many Nationalists would like to think.
This is a rather thoughtful article on the economic implications of independence:
As to the EU, the Commission and at least one member country have said that Scotland would be treated as a new entrant. The rules of entry for new entrants are quite clear and published on the EU website.
You can package the BoE role anyway you want. The reality is that if Scotland wants to retain the pound she will have to agree to fiscal, monetary and regulatory conditions imposed by London.
I'm not going to bother answering each of your points in turn because we are just going around in circles. However, the Nationalist threat to renege on debt is, in my opinion, an empty one. The consequences in terms of international reputation and retaliation from the rest of the UK would just be too great.
You have argued that remaining in a Sterling union run 'from London' would result in a loss of sovereignty for Scotland and the currency would be run primarily for the benefit of England/rUK. If the Chancellor wishes to rule out such an arrangement which (by your argument) would benefit his side, then by your own argument it can only be for political reasons; namely, to undermine the case for independence. (Unless you now wish to have your cake and eat it, and argue that a currency union actually would be beneficial to Scotland? )
If the Chancellor is prepared to rule out a currency union to undermine the case for independence, then so be it. But he must understand that his actions are going to have consequences, and no conceivable share of non-fixed assets that the rUK can deprive Scotland of will come anywhere close to 8.4% of £1.6 Trillion of national debt. (£134 Bn.)
The currency is a national asset, if it is not apportioned to both parties upon independence then the apportionment of national liabilities is also called into question. The Governor of the Bank of England has already given his verdict that with caveats over centralised monetary policies, a currency union could be made to work. Scotland is no more reneging on the debt than the Chancellor is reneging on his sides responsibility to apportion the UK's assets on independence. If the Chancellor isn't prepared to be amicable, then on his own head be it.
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We can agree to disagree on the electoral system. I will rest my case on the referendum held just a couple of years ago.
Fair enough.
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Like many Nationalists, you make much of oil and whisky. In fact, Scotland's wealth tends to be overstated. While the economy does benefit from North Sea oil, a significant proportion of Scotland's domestic economy – particularly in oil, drinks, energy, and financial services – is owned by overseas stakeholders. In terms of the overall UK economy, oil and Whisky represents around 5%. Indeed, total tax receipts from oil production is only round 2.5% of the whole. The UK economy is far less dependent on oil and whisky than many Nationalists would like to think.
On an aside, I'm not a nationalist. I've never even voted for the SNP in any election. (Former Lib-Dem voter if you're interested!) I'm not any more or less proud of being Scottish than being British. I'm in favour of independence, and while I think the SNP have made for a pretty good Scottish Government; I share the view that patriotism is the last refuge of a scoundrel. My reasons for desiring independence are solely the ones I have given. A lack of democractic accountability, and the inhumane policies of successive UK Governments from the war in Iraq to the inhumanity of welfare reform.
On the subject of oil and whisky you've mis-construed my point. I'm not making a point about Scotland's overall wealth, I'm making the point that without oil and whisky exports within the Sterling zone, then the Sterling zone's balance of payments deficit will almost double. That will lead to a significant de-valuation of Sterling, with negative effects for the City of London as the place foreign investors stash their cash. Again, on the Chancellor's head be it!
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As to the EU, the Commission and at least one member country have said that Scotland would be treated as a new entrant. The rules of entry for new entrants are quite clear and published on the EU website.
What your argument does not consider is that EU law is unique in the sphere of international law, in that it does not only discuss the rights of Member States, it also discusses the rights of European Citizens. While an independent Scotland may not be a Member State without the conclusion of negotiations in the 2 year interim; all Scots will continue to be European Citizens on independence unless the UK Government were to go to the European Court of Justice and demand that all people living in Scotland be stripped of their British nationality. (Might not go down well for the 400,000 English people who live in Scotland.) What you are therefore left with, is a scenario in which Scots remain entitled (as EU citizens) to all of the protections afforded to them under EU law, including the right to live, work and claim welfare in other European countries; without any responsibility whatsoever to pay for any of it or to reciprocate that treatment to the nationals of other EU countries in Scotland. To compare, as you have done, the scenario of Scottish accession; with the rules applied to Croatia or Bulgaria upon their accessions; is absurd. The EU can (and will) negotiate Scotland's entry into the European Union, because unlike in Croatia and Bulgaria; the balance of power is not 100% on the side of the EU. It is in the EU's own interest to bring the legal minefield of independent Scottish EU citizens to as swift a conclusion as it possibly can.
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You can package the BoE role anyway you want. The reality is that if Scotland wants to retain the pound she will have to agree to fiscal, monetary and regulatory conditions imposed by London.
"Imposed by London", I love it! Forgive me the smile, it was "imposed" on me by evolution through natural selection!
Eoin
Last edited by Eoin (pronounced Owen); 02-12-2014 at 05:53 AM..
BBC news this morning reported that George Osbourne is likely to rule out a formal currency union with an independent Scotland.
One of the problems the Nationalists have is that they assume that because something makes sense to them, it makes sense to everyone else .... which of course it does not.
The amusing thing about this is that the nationalists have been complaining that Westminster has not been giving them answers thus adding to the uncertainty. But when they get an answer they don't like they then complain about bullying. They are like spoiled kids, obsessed with their own sense of entitlement. And these are the people who want to run the country post-independence
I predict that a few more things on the Nationalist wish-list are going to go down the pan in the next few weeks.
Like many in the Nationalist camp, you are failing to understand the difference between an 'asset' and an 'institution'.
The pound is not an asset to be divided up. The pound is an institution which belongs to the UK. The pound is Scotland’s currency now precisely because Scotland is part of the UK now. If Scots vote to leave the UK they will be voting to leave the UK’s institutions, including the pound.
in the event of a Yes vote in the independence referendum in September, Scotland would become a new State in international law and that the rest of the United Kingdom would continue as the “continuator” State. Institutions of the United Kingdom would automatically become institutions of the rest of the United Kingdom.
This is an interesting article, albeit from a Unionist perspective, and which helps explain the issue of assets and institutions:
"Two conclusions may be drawn from the above analysis. The first is that core elements of the Scottish Government’s approach to independence are based on assumptions which are highly questionable in law."
"The second is that the costs of independence may be considerably greater than has generally been understood."
Like many in the Nationalist camp, you are failing to understand the difference between an 'asset' and an 'institution'.
You seem determined to muddle semantics and skirt around the issue. It is very simple:
No currency = No national debt.
You can classify the currency or the national debt as an asset, or an institution, or you can call it a banana for all it matters. Scotland is under no obligation to inherit any share of the national debt. Not only has no Scottish 'Institution' (<- I used the word for you!) ever borrowed it, it has been guaranteed by Westminster in its entirety.
There is a moral obligation on Scotland to honour a fair share of the debt, and it would be my preference to see that happen. However, if the Chancellor wishes to play hardball, then he's going to come out with the worst deal for the rUK in British history, his crowning achievement to round off an appalling term in office.
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From the conclusion .......
"Two conclusions may be drawn from the above analysis. The first is that core elements of the Scottish Government’s approach to independence are based on assumptions which are highly questionable in law."
"The second is that the costs of independence may be considerably greater than has generally been understood."
The author of the article does not appear to have considered the eventuality where Scotland leaves the UK with a national debt of zero which is the discussion we've been having. In that case he ought to have concluded on the point, "the cost savings of independence may be considerably greater than has generally been understood."
You seem determined to muddle semantics and skirt around the issue. It is very simple:
No currency = No national debt.
You can classify the currency or the national debt as an asset, or an institution, or you can call it a banana for all it matters. Scotland is under no obligation to inherit any share of the national debt. Not only has no Scottish 'Institution' (<- I used the word for you!) ever borrowed it, it has been guaranteed by Westminster in its entirety.
There is a moral obligation on Scotland to honour a fair share of the debt, and it would be my preference to see that happen. However, if the Chancellor wishes to play hardball, then he's going to come out with the worst deal for the rUK in British history, his crowning achievement to round off an appalling term in office.
The author of the article does not appear to have considered the eventuality where Scotland leaves the UK with a national debt of zero which is the discussion we've been having. In that case he ought to have concluded on the point, "the cost savings of independence may be considerably greater than has generally been understood."
Eoin
Eoin
You seem to be of the opinion that the Nationalist threat of not taking on their share of the debt is a credible one. I disagree. The consequences of 1) not getting a share of assets, 2) potential retaliation by rUK and 3) consequences in the international bond markets are just too great.
Anyway, now that it seems that the ability to use the pound is slowly slipping away, what is Plan B? The Euro or a new currency?
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