News Column

Scotland's referendum is a fateful moment for the whole UK

January 30, 2014


ACTIONS always have consequences. If it votes for independence later this year, Scotland could theoretically introduce its own currency. In practice it won't, and will have to choose: keep the pound, which will remain in the hands of the Bank of England , or join the euro, controlled by the European Central Bank . That means Scotland would not be fully independent, and that its national debts would face a greater risk of default than the UK's , a country able to borrow in sterling, a currency it controls. Mark Carney , the governor of the Bank of England , was merely stating the obvious yesterday when he explained what the economic consequences of Scottish independence would be. Scottish nationalists may point out that this doesn't really matter to them: better, from their perspective, to be politically independent even if compromises still need to be made over economics. Fair enough - but the Scottish establishment will then face another choice: either embrace sensible free-market reforms to make sure that its economy and labour market can adjust to shocks, or face a Eurozone periphery-style crisis next time there is a problem. Sadly, we know politicians aren't always rational. I hope Scotland votes to remain part of the UK - but the UK then needs a constitutional revolution, with England , Wales and Northern Ireland given the same powers of self-government - and parliaments - already afforded to Scotland . In the meantime, the referendum is moving closer, the polls are narrowing and the fate of the UK lies in the balance. Britain faces an historic decision, and it is time for business leaders to have the courage of their convictions. Please speak out now - or forever hold your peace.

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Source: City A.M. (UK)

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