The U.K. government’s refusal to grant a currency union with an independent Scotland is a bargaining chip and will be dropped if voters back independence in next month’s referendum, Joseph Stiglitz said.
The Nobel-prize winning economist, speaking in a Bloomberg Television interview today in Lindau, Germany, said that it’s in the interests of all parts of the U.K. to reach a “stable transition” on monetary arrangements post-independence. Stiglitz is a member of a panel advising Scotland’s nationalist government on the finances of independence which recommended Scotland seek to retain the pound as its currency.
“The position of England today is obviously bargaining, trying to change the politics of the electoral process,” Stiglitz said. “Once they get independence, if that happens, then I think there would be a very different position.”
The Columbia University professor’s remarks thrust him to the forefront of the debate over Scotland’s future four weeks before the vote that could spell the end of the U.K. after more than three centuries.
The pound has taken center stage during the campaign for the Sept. 18 referendum, with the three main U.K. political parties all saying they would refuse to grant a currency union. Scottish First Minister Alex Salmond came under fire from anti-independence campaign head Alistair Darling in a live televised debate on Aug. 5 for saying there was no need to come up with an alternative plan to retaining the pound.
“Countries can work with many different monetary arrangements,” said Stiglitz. “The concern here really is can they achieve a stable transition. I think it’s in the interests of the U.K., of England and everybody to have that kind of stable transition. And I think that can be accomplished.”
The chairman of the Scottish advisory panel that Stiglitz sits on said yesterday the proposed currency union remained the best option, though the argument had become political rather than economic. Crawford Beveridge told an audience in Glasgow that the U.K. might not behave “rationally” in negotiations following a Yes vote, the Herald newspaper reported.
“There are several viable options out there just in case the politics trumps the economics,” Beveridge said.
Polls suggest Scots will reject independence, though the gap isn’t wide enough to rule out a Yes vote. An ICM poll for the Scotland on Sunday newspaper put the gap at 10 percentage points. Excluding undecided voters, Yes support climbed two points to 45 percent and No dropped two points to 55 percent. A separate poll commissioned by the Yes side put the gap at four percentage points.
The debate over Scotland illustrates how areas of the country are diverging over issues such as university tuition, which is free is Scotland and not in England, said Stiglitz, who was attending a conference for Nobel laureate economists.
“These are two parts of the U.K. moving in different directions,” he said, also citing spending priorities on such things as defense. “There’s a different set of priorities.”
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