Salmond Says U.K. Debt to Avoid Pound Union Defies Sanity
Scottish First Minister Alex Salmond ruled out the need to consider an alternative currency for an independent Scotland because the U.K. faces being saddled with more debt by continuing to refuse a currency union.
Chancellor of the Exchequer George Osborne, backed by other British political parties, dismissed the idea of sharing the pound with the new state should voters in Scotland decide to leave the U.K. in a referendum on Sept. 18. Opponents of full autonomy for Scotland have said Salmond now needs a Plan B, such as joining the euro or setting up a new currency.
Osborne “doesn’t have the right to dismiss our right to sterling unless of course he’s prepared to say we’re taking the assets but we are also taking the liabilities,” Salmond said yesterday in an interview with Bloomberg in New York. “And he won’t say that because no sane person is going to take on a 100 to 125 billion pounds sterling or another $180 billion of debt.”
Opinion polls consistently show more Scots want to retain the 307-year-old U.K. than leave it, though enough are still undecided to sway the referendum. The campaign in recent months has moved to the forefront of politics in Britain, with the currency, North Sea oil revenue and European Union membership key areas of the battle over Scotland’s future.
Salmond reiterated his view that the position on the pound is a temporary negotiating position and a bluff by Prime Minister David Cameron’s government.
“There is no way, no way on earth that the chancellor of the exchequer or the shadow chancellor would want to end up in that position,” said Salmond, who has run Scotland’s semi-autonomous government in Edinburgh since 2007. “The problem is they’re sitting with a busted flush.”
The Scottish government has done its research and a panel of experts, which includes two Nobel laureates Joseph Stiglitz and James Mirrlees, advised in a report published a year ago that a sterling zone would be best for both an independent Scotland and the rest of the U.K., Salmond said.
The 59-year-old former Royal Bank of Scotland Group Plc oil economist cautiously pointed to the euro region’s Greek bailout and the 60 percent productivity gap between Greece and Germany to explain why continuing use of the British pound would be beneficial for Scotland versus adopting the euro.
“I’m not meaning any disrespect to Greece, I’m just pointing out the last set of difficulties in a currency union which has a divergent degree of productivity in its component members,” he said.
“We have invested as a country a great deal of effort into building sterling as a currency and we are as entitled to keep it as anyone else is,” Salmond added. “It’s not in our interest to see anything this detrimental to the economy in the rest of the U.K. We want the rest of the U.K. to do well.”
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