UK Chancellor George Osborne has finally clarified the UK Treasury’s position
It took the UK Treasury long enough to openly come out with a statement that a vast majority of market participants was already widely expecting. Last week the Chancellor of the Exchequer George Osborne has finally clarified the position of the current government. What’s more – there is an overwhelming and very rare consensus between all three major parties in the UK that a currency union with Scotland is out of the question.
Scottish independence advocate and Scotland’s current First Minister Alex Salmond has stated that the parties are trying to “bully” voters ahead of the referendum which will be held on the 18th of September. A rather blunt statement considering the fact that his political champions have drafted a white paper that single handedly has dismissed the currency issue as such and welcomed a currency union with the UK.
Well guess what – it takes two to get married, and the UK Treasury has just said a resounding ‘No!’ to its unborn partner. Chief Secretary of the Treasury Danny Alexander has presented to the Parliament an assessment of the currency union question with Scotland that outlined a couple of crucial obstacles to the implementation of such a treaty.
According to the paper the Eurozone has already shown that even agreed fiscal rules are not sufficient to ensure stability of a currency union, while and independent Scotland would be much more exposed to risks stemming from volatility in financial and energy markets. As Scotland is ensuing independence it would only make sense to have direct control over monetary policy to be able to address local challenges more efficiently.
As more time goes on, the Scottish independence story is drifting ever more far away from reality. That said, the UK Treasury is not to blame – the white paper that the Scottish National Party has put out in November last year has been sufficiently vague to doom the idea to failure by effectively ignoring the currency question and the economic consequences that would arise from leaving the British pound behind.
For a link to the Scotland Analysis paper go to the UK treasury’s website.