The results of the recent Irish referendum were disappointing, if predictable. The Irish people had a wonderful opportunity to speak for the dispossessed and disenfranchised of Europe, and perhaps to put the €uro out of its misery. But they were intimidated by the threat of exclusion from Brussels’ bail-out funds (in which they seem to have more confidence than most people). So they gave the EU a blank cheque for unlimited austerity for an indefinite period. As Janet Daley put it in the Sunday Telegraph, it seemed more like a sigh of resignation than a plebiscite.
Meantime, up in Scotland, the SNP pursues its dream of Scottish independence, and looks forward to a referendum of its own. This Jubilee weekend, I found myself thinking of Alex Salmond’s commitment to ask Her Majesty to continue in the rôle of Head of State after Scottish Independence. On the face of it, perfectly sensible, since her predecessor King James was The First (of England) but also The Sixth (of Scotland). The two Crowns were united under James the First and Sixth.
In fact Salmond has done several things apparently designed to reassure Scots who may be intimidated by too much change at one time. Declaring independence is a mighty step. To abandon both the Pound Sterling and the Monarch at the same time might appear foolhardy. There is a well-documented tendency for referendum results to favour the status quo, so perhaps Salmond wants to build as much status quo as he can manage into his proposals, short of abandoning his core objective of independence.
He would certainly be wise to seek to maintain the Pound. It would hardly increase Salmond’s YES vote to offer to take Scotland into the €uro against the backdrop of current developments in the eurozone. But Scots should reflect that keeping the Pound may not be in Salmond’s gift. It takes two to tango — and to agree a currency union between independent states.
Currency unions require fiscal transfers for stability. We are seeing in the eurozone exactly what happens to diverse economies forced into a currency union without a lender of last resort, and without fiscal transfers. In the Sterling Area, itself a currency union, we have a formalised mechanism — the Barnett Formula — to transfer substantial sums from England, which is richer, to Scotland, which is poorer. Some of the English don’t like this a bit — they don’t necessarily feel richer — but this is the price we pay for maintaining stability in our currency union (and which Angela Merkel declines to pay in her currency union, with malign effects).
Would George Osborne be inclined to maintain the Barnett Formula for an independent Scotland? Would the Bank of England care to be the lender of last resort for Edinburgh? Would the Treasury bail out Scottish banks that got into trouble in the future? I doubt it.
Then there’s the Head of State issue. Just now, I’m delighted to see that Her Majesty is getting stratospheric approval ratings in the UK. I’ve been unable to find a separate figure for Scotland, but anecdotal evidence — including vox pops on the BBC — suggest that while many Scots admire the Queen, her popularity in Scotland may not be quite as high as in England. So why is Salmond so keen that Her Majesty should remain Head of State in an independent Scotland?
Perhaps simply because otherwise, there would be a contentious debate about how a Scottish Head of State should be selected, and a row over that question could seriously overshadow the whole independence issue. I imagine that Alex may be terrified that his own name might end up in the frame. Alex the First of Scotland? I don’t think so, although an Economist cartoon has already shown him wearing the Crown.
Salmond is a hugely successful and likeable politician, but any suggestion that he might be tipped as Head of State — or worse still that his quest for Scottish independence contained quite such an element of personal ambition — could scupper his chances.
It may be that his promises to keep the Pound and the Queen are simply moves to close down what could otherwise become uncomfortable debates and distractions.