So since the topic of a currency union was such a hot topic from the No camp the other night, I’m going to quickly summarise why there WOULD be a currency union if we went Independent in order to rubbish the claims that Scotland would not be allowed to use the pound. Firstly, the pound is a fully tradable international currency so there will be no issues using it, the matter is how Scotland would be using it. So Scotland pays nearly 10% GDP to the UK. (GDP - is a measure of the country’s economic activity and wealth generated). So if the UK was to suddenly lose 10% of their overall GDP then the pound would be weakened significantly without Scotland contributing to the rest of the UK. To sum up how disastrous 10% would be, then look at the global recession, which hit us in 2008. The UK GDP dropped by an average of 1.47%, which then wreaked havoc on the UK’s economy, and led to house prices collapsing by 20%, unemployment shot up, wages were cut or frozen, businesses shut down from shops to manufacturers, etc. So if 1.47% does this damage, think what the GDP dropping by 10% would do for rUK were Scotland not to share the pound, and therefore lose out on the billions of pounds a year in oil revenues, whisky exports, manufacturing etc. Also not only that, if Scotland were refused a currency union then Scotland would not have to take on any of the UK’s debt, which given then the drop of 10% GDP added to the full pot of debt would cause even more austerity in England (apart from London of course). This sounds just great for Scotland right? Well not really because the rest of the UK would be Scotland’s biggest trading partner, and if it went down the drain initially then so would Scotland. So basically if we were to go independent neither nation can afford NOT to be in a currency union.
Posted on: Wed, 06 Aug 2014 21:41:37 +0000
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