Twice now in the space of twelve years we have seen a British Chancellor do what it takes to save the British economy. In 2008 the Treasury bailed out the banks in 2020 it has just bailed out everyone else. Can any Chancellor prior to Rishi Sunak have had such an extraordinary beginning to his job? The numbers are staggering. The Government has backed British business with loans of £350 Billion. The Government will do what it takes to get us all through this.
The Government can do these things because the markets trust the British economy. We have a long history of stability; we pay back our debts and we have our own currency. There are times when it is necessary to be prudent and to spend less, but this is not one of those times. In times of war and times of crisis it is the duty of Government to spend what is necessary and borrow as much as needed. The task is to get us through the next few months and years. But we could not do this if we did not have the Pound.
Currency does matter, but not in the way that people think it does. It doesn’t matter at all that you have to change money in order to go on holiday. That is at best a minor inconvenience. What matters is that the Bank of England controls monetary policy and uses this control for the benefit of Britain. This is why we can credibly back British business.
Compare and contrast the situation in the Eurozone. A country that is in trouble there cannot devalue its currency, because it shares it with a number of others, nor can it set its own interest rates, nor can it do what our Chancellor just did. Only the European Union as a whole and the European Central Bank can do these things, but this requires an agreement and common purpose that simply does not exist. Countries cannot bail themselves out unilaterally because they gave up the means of doing so when they joined the Euro. Does membership of the EU really look more beneficial than being an integral part of Britain?
If Scotland had been independent in 2008, we would have been unable to bail out the Scottish banks. If Scotland had become independent in 2014, we would be unable now to bail out the Scottish economy. It is becoming less and less likely that people are going to be burning oil twenty years from now, which is one reason why the price keeps falling. It matters little if it’s Scotland’s oil or not as the cost of extracting it is likely to remain higher than it is worth. SNP promises in 2014 turned out to be not worth the paper they were written on. Now they look still worse.
We are going to see once more that monetary union without political union (the Euro), which was the SNP’s 2014 plan is a terrible idea. But using someone else’s currency unilaterally is if anything even worse. Who would bail out Scotland under those circumstances? We wouldn’t have our own central bank and the British treasury would have no obligation to lend anything to businesses in Scotland.
But Rishi Sunak just killed Scottish nationalism. A huge number of Scottish businesses and individuals are going to have to accept large loans from the British Treasury. We may not be able to pay off such debts for many years. But if Scotland decided to become independent the question of debt would be of huge importance for any divorce settlement. Each of us has a share of Britain’s national debt which is just going to increase by an enormous amount. Plus, many of us will have mortgages and now Covid 19 debts which all will be denominated in Pounds Sterling. The idea that we are going to risk the journey the SNP plans whereby we first use the Pound unofficially only to turn it into Scots Pounds and then finally into Euros, looks simply impossible. We are in it together whether we like it or not. Everyone in Britain owes each other a debt we cannot repay. We have a shared British mortgage, and no one can unilaterally walk away without paying their way. Just as Greece could not leave the Eurozone without defaulting, so too Scotland could not leave the Poundzone without defaulting. But this is not merely a matter for Scotland or Greece.
If Scotland were to declare independence unilaterally or if Scots were to default on the debts we owe to our fellow British citizens, who would ever trust us? In that case we wouldn’t be able to do what the Chancellor just did. But once we recognise that everyone in Britain owes each other a debt, then it becomes clear that the separation of one part of Britain from the other parts is a matter for all of us. A Scottish default would damage not merely Scotland, just as a Greek default would cause a shock across the whole Eurozone.
It’s not for the SNP to decide if Scotland can become independent. It’s not merely a matter for the voters in Scotland. It’s a matter for the British people as a whole. This is the lesson that the United States learned in the nineteenth century. When we accept the benefits of being a British citizen, we also accept the obligations. You cannot accept money from the Treasury and then walk away. Doing so would make you a thief.
This post was originally published by the author on her personal blog: https://www.effiedeans.com/2020/03/rishi-sunak-just-killed-scottish.html