Transcript of Ed’s interview on currency union

Thursday 13th February 2014

Q: Why has Labour decided to rule out Scotland retaining the pound if there’s a No vote?

EB: Scotland is making a momentous decision this year whether to stay in our union or to leave. I firmly hope Scotland stays in our union, and under Labour we’ll promise a different future: action on youth jobs, getting rid of the bedroom tax, a fairer approach to deficit reduction with a 50p top rate. Alex Salmond is saying to people that you can have independence and keep the pound and the Bank of England. That is not going to happen. It would be bad for Scotland, it would place an unacceptable burden on the UK taxpayer, it would repeat the mistakes of the euro area. In fact worse, you’d be trying to negotiate a monetary union as Scotland is pulling away from the UK. It won’t happen, I wouldn’t recommend it. Scotland will not keep the pound if Scotland chooses independence.

Q: Scotland is not Greece though is it? I mean, there’s not that much divergence between the economies either side of the border. So, if they’re prepared to take the hit of not controlling their own interest rates, if they’re prepared to live with that then what’s wrong with it?

EB: The lessons of the euro-crisis is that it could place unacceptable burdens on large countries and small countries, and what’s happened in the euro is they are now trying to negotiate closer union – a closer banking union, a closer fiscal union, a closer political union. The idea that Scotland could negotiate an acceptable monetary union with the rest of the UK while it’s trying to move away, weakening the banking union, moving away from fiscal union, that would be catastrophic for interest rates, for taxes and for economic stability for Scotland and for the rest of the UK. I don’t think there’s any prospect of any negotiation being successful, that’s why we can say now, unequivocally, that is not an agreement we will reach. Labour will not negotiate a continued sharing of the pound and the Bank of England with an independent Scotland in the future.

Q: Aren’t you risking blowing a big hole in the finances of the rest of the UK, because Alex Salmond says if we don’t have the pound then we won’t take our portion of the debt either.

EB:                  The idea that Alex Salmond could hope to be credible as an international figure, negotiating with the European Union or the UK government, while he makes threats which are so irresponsible he would renege on debt. I don’t think that’s taken seriously because if it was true it would be utterly catastrophic. The reality is the Treasury has today published a very important assessment. It draws heavily on the analysis of the euro assessment – the case for Britain joining the euro from 10 years ago – I strongly agreed with the Treasury analysis of ten years ago that it would be wrong for Britain to join the single currency. Today I strongly agree with the Treasury analysis and the view of the Permanent Secretary that a currency union between an independent Scotland and the rest of the UK would be bad for Scotland and bad for the rest of the United Kingdom. I, as a Chancellor, could not sign up to an agreement which I knew would be bad for Scotland and bad for taxpayers across the rest of the UK. It’s very important that we’re clear about this: Scotland cannot keep the pound and the Bank of England if it chooses independence.

Q: Is there a risk for you politically here, because there’s been some rumblings among Labour people in Scotland that aligning yourself so closely to Osborne on this particular part of the argument does carry a risk with it.

EB:                  The Labour Treasury in 2003 published an assessment which said Britain shouldn’t join the single currency, and history has proved that judgement to be right. Drawing upon that analysis the Treasury, 10 years on, is saying the same arguments apply to Scotland and that is correct. I want Scotland to stay in the Union, and more than that I want a fairer future for the UK and Scotland with a Labour government, by restoring the 50p top rate to get the deficit down in a fairer way, by having a youth jobs programme. We can do things in a different way and a fairer way, but if Scotland chooses independence that will cost jobs and growth in Scotland, it will lead to higher interest rates, and the idea that the rest of the UK and the next Labour Chancellor would say, well, ok, we’ll sign up to higher interest rates and higher taxes too, to make that happen. Just not on.

Q: Nicola Sturgeon says that you, George Osborne and Danny Alexander are basically trying to bully the Scottish people.

EB:                  I want to continue with this very successful union we’ve had for hundreds of years and more than that, I want the next Labour government to make it a fairer union for the future. It is the SNP who have put independence and exit for Scotland on the agenda. Once they’ve done that it’s very important that we as politicians spell out to the people of the UK, including Scotland, but also the rest of the UK what the consequences of independence would be and we’re honest about the choices which will be faced. I don’t think that Alex Salmond and Nicola Sturgeon are being honest with the Scottish people when they say Scotland can keep the pound because they must know it is not true. The idea that Scotland could keep the pound and the Bank of England and be subsidised and supported by the UK taxpayer having chosen independence is not going to happen. It would be wrong for Scotland and wrong for the UK. That’s just telling Alex Salmond and Nicola Sturgeon what life would be like in that real world.

-ends-

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Posted February 13th, 2014 by Ed's team

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