3 Big Prolems with Scottish Independence

If Alex Salmond wins the Referendum for Scotland to become independent, it seems more than likely to finish his career in politics.

The 3 biggest problems about gaining independence are:

1. The Currency.
2. Joining the EU.
3. Scotland’s inability to borrow at reasonable rates.

1) The Currency

Salmond is still trying to convince the Scots that they will still use the GB pound and there will be no change. I don’t think there is another Scot in the world who believes that. The GB pound is printed with the words “Bank of England” and underneath this heading it says “I promise to pay the bearer the sum of xxx pounds” There is then the following statement ‘London for the Governor and Company of the Bank of England’ this is followed by the ‘signature of the Chief Cashier’

No mention of Scotland.

The Bank of England act as the Lender of Last Resort, which means it underwrites the UK borrowing, and the bank deposits of peoples savings. This is for the UK, not an independent country such as Scotland, France or any other country.

Because the UK has a powerful Lender of Last Resort, the UK government and UK banks can borrow at very low rates. The UK population have the reassurance that their money is safe in their bank, and that they can buy their homes on cheaper interest rates.

An independent Scotland will not have this. They know that they will have to pay a higher interest rate on their mortgages, credit cards and loans. They don’t know what currency they will use, and they don’t know who will be their Lender of Last resort will be.

The obvious course of action would be a new Scottish Currency, until such time as Scotland joins the EU.
Scotland will have to try and convince its trading partners that the new currency is backed up with something solid; otherwise the currency will be worthless outside of Scotland. Alex Salmond has said he will build up reserves from the oil revenue. That will take time, in the meantime cuts in public spending; increased taxation and higher interest will be the only course open to Scotland.

2) Joining the EU

On the date Scotland is declared Independent, it will leave the EU. Alex Salmond expects to successfully negotiate joining the EU on that date. If he is successful, Scotland will revert to using the Euro.
The chance of him negotiating entrance to the EU are slim. Several countries have indicated they will vote against entry.

If successful an independent Scotland will be able to borrow from the European Central Bank, the trouble is it could take several years to gain entry, and it is forecasted it will take several years to agree what assets are jointly owned by a smaller United Kingdom and the new evolved Scotland.

3) Scotland’s inability to borrow money.

Alex Salmond’s constant boast that he will default on Scotland’s debt to the UK has worried countries all over the world. If Scotland does manage to join the EU, every EU member will have to contribute to the ECB to lend Scotland money. If he is prepared to default on his countries debts to Great Britain, nobody will vote him into the EU, and have him defaulting on Scotland’s debt. Nobody will lend Scotland money knowing he is prepared to default on Scotland’s debt to the United Kingdom, which he has been a part of for 300 years.

As I said, if Alex Salmond wins the Referendum for Scotland to become independent, it seems more than likely to finish his career in politics.

Now you know why some financial institutions and companies are preparing to migrate south of the border, if Scotland gains independence.

According to the latest polls 50% on the Scottish people are prepared to vote ‘Yes’ , and take a leap in the deep unknown.
Read what the experts say:
Alex Salmond’s own former economic advisor, Professor John Kay, said: “The choice of currency would be the most important economic decision for an independent Scotland. All aspects of economic policy, including fiscal and
monetary arrangements, are contingent on that choice.”
Professor John Kay Former economic adviser to Alex Salmond & Professor of Economics at the London School of Economics said: If I represented the Scottish government in the extensive negotiations required by the creation of an independent state, I would try to secure a monetary union with England,and expect to fail … So Scotland might be driven towards theoption of an independent Scottish currency.“Alex Salmond has said I think rather stupidly that there is no plan B. The trouble with having no plan B is you don’t have any negotiating power if you don’t have a Plan B. So there hasto be a Plan B. And Plan B has to be an independent currency.”
Brian Quinn Former Executive Director of the Bank of England & Honorary Professor of Economics and Finance at the University of Glasgow said: “The concept of a shared system of supervision and crisis management is seriously - perhaps fundamentally – flawed and that its weaknesses would increase during theindeterminate period of transition following independence.
This, together with the uncertainties regarding Scotland’scontinued use of sterling arising from its proposed membership of the EU, are likely to result in higher prudential requirements for Scottish financial institutions. In these circumstances it would not be surprising if they reconsidered their group structures and main domicile.”
As a consequence of the chance of a 'Yes' vote the GB Pound fell by 1.3$ against the US dollar, and 1% against the Euro.

Shares in Scottish-based firms suffered sharp falls on the stock market. Edinburgh-based Standard Life closed 2.43% lower on Monday, Royal Bank of Scotland slipped 1.3% and Lloyds Banking Group, which owns Bank of Scotland and Scottish Widows, dropped 2.43%.

Perth-based energy supplier SSE, Glasgow pumps specialist Weir Group and fund manager Aberdeen Asset Management also all fell between 1% and 2.25% over the course of the day.
Read what the Scottish Farmers say.

Related Articles: Scotland's NHS, info Alex Salmond determind to use UK Pound : Scotlands Currency Debate : Scotlands Plan "B"Scotland Child Guardian Act : Scotland and the UK Pound: Scotland's Independence | The Cost : Will Scotland be better off Independent : Scotland's YES campaign gaining ground : UK and Scotlands Independence : Scotland's Independence Scottish Parties Conferences : Scottish Referendum Probabilities and Possibilities: Salmond chases Female vote: Scottish CBI Back 'NO' Vote : Billions of pounds will flow from Scotland with 'Yes' vote : Alex Salmond reckless Gamble with Scotland : Scottish Independence,is it viable? : Salmonds Dream Shattered | Blog | Scotland the Brave : Blog | Gordon Brown and Dream Team :Transport and an Independent Scotland : Scotlands Referendum

If you like this article, hit the “Like” button.

Vic Farron RFT Express.
Follow us on Twitter :::Be a fan on Facebook :: and Blogspot   [comment on Blogspot and our Hosted Blog, all high Google Page Ranks ] ::Bookmark this page using the ‘Share’ button'