Scotland, England and currency union – or two bald men and a comb

It’s not clear what impact David Bowie might have had on the Scottish independence referendum with his “Scotland… stay with us,” plea at the recent Brit awards ceremony. Then again, Bowie was in New York at the time and his speech was actually delivered by Kate Moss dressed in a Ziggy Stardust outfit, so the message might have become a little confused.

More clear is that a similar intervention from senior UK politicians recently has backfired for the Better Together campaign. Ed Balls and Danny Alexander both backed George Osborne’s announcement that an independent Scotland would not be able to keep the pound – more accurately, that the remainder of the UK would not agree to continue the existing currency union – but the warning has not had the intended effect on public opinion.

Support for a Yes vote in the referendum went up in the first new poll after Osborne’s warning, and support for a No vote fell, although the No campaign retains its lead (47 per cent to 38 per cent). The more fine-grained analysis from John Curtice suggests reactions differed depending on voters’ existing perspectives: that supporters of the No campaign accepted Osborne’s argument that a currency union could not work and took seriously his threat to veto it, while Yes voters were unconvinced by the argument and more inclined to believe Osborne was bluffing.

The fact that the currency debate has served to confirm existing prejudices reveals much about its quality. In fact, the recent exchanges between the UK and Scottish governments amount to little more than a phoney war, in that both are making definitive statements that are difficult to support with evidence.

In fact, both of the main options for Scotland’s monetary future –maintaining the status quo or creating a new currency union – have potential benefits and serious risks, for both an independent Scotland and the continuing UK state.

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Image: Scottish Government