Wednesday 5 July 2023

Would Scotland join the Euro?


Last year Nicola Sturgeon told us that an independent Scotland would join the EU, but would not join the Euro, because it isn’t right for us. The EU responded by saying that in that case Scotland’s application would be refused. This year Humza Yousaf tells us that Scotland upon applying to join the EU would agree to the normal accession route and promise to join the Euro in the future, but that this doesn’t mean that we would actually use it. There isn’t really any difference is there?

Yousaf wants to appear to be a good European. Yes, we’ll follow the rules. Of course, we’ll promise to use the Euro, but in an aside to everyone in Scotland including SNP supporters he has the loudest of stage whispers “Don’t worry, we’d make sure that Scotland was never ready to actually use the Euro.” It’s like a toddler telling teddy that she’s not going to go to bed yet assuming that mummy who is in the same room can’t hear. Obviously the Eurocrats are incapable of hearing what Yousaf is telling Scotland and are incapable of reading the Herald.

It is usually pointed out at this point that there are lots of EU members that don’t use the Euro. But while the EU might accept that countries that joined just after the Euro was created haven’t got round to it, and while it might have been willing to give Denmark and the UK (when it was a member state) a permanent opt out, it doesn’t follow that it would be as tolerant towards a new member state some decades later. If the UK tried to rejoin, it would certainly have to adopt the Euro.

The EU works by means of being initially flexible only to turn out to be gradually stricter than expected. The UK joined what most voters thought was a trading union (a common market) that would not change UK sovereignty one little bit. Some years later we discovered that we were part of an ever closer union and that on a whole host of issues EU law was supreme.

So, while membership of Schengen was initially optional and while the EU would initially accept members not wishing to join the Euro, by the time Scotland got round to applying for membership the EU would be stricter.

There was a brief moment of opportunity for the SNP in the years following Brexit, where the EU was eager to punish the UK as much as possible for voting to leave. But this moment has passed. The main reason is the UK’s continuing willingness to help defend Europe against Russian aggression. The EU and the UK are now cooperating rather than in continual conflict. The idea that the EU will deliberately make things easy for 5 million Scots and not mind damaging relations with 62 million former UK citizens whose taxes are defending Europe simply no longer applies.

But if this is the case then joining the EU would not be as straightforward as Yousaf thinks. Scotland would be the external border of the EU and it would have to join Schengen. This means that there would be free movement from the Greek border with Turkey and the Estonian border with Russia all the way to the border between Scotland and England. This makes membership of the Common Travel Area problematic. If there were an open unchecked EU external border between Scotland and England, then anyone who reached the EU could simply get on a plane to Edinburgh and then on a bus to London. There would be no passport checks at all. It’s worth remembering that Ireland has an opt out for Schengen precisely in order to maintain the Common Travel Area.

Yousaf really wants an opt out from (nudge, nudge, wink wink) both the Euro and Schengen. But while this might have been available 30 or 40 years ago, it’s not available now, let alone when or rather if Scotland ever applied to join the EU.

EU membership has slowed and is getting harder. Since 2007 only one country has joined the EU, Croatia in 2013 and it is both a member of Schengen and the Euro. There hasn’t been a new member for 10 years. Scotland isn’t going to be independent any time soon, perhaps it never will be. There would then be years of divorce negotiations with the UK and only when these have finished would there be accession talks with the EU. Some countries have been waiting decades to join the EU. The idea that Scotland could do so while only pretending to join the Euro and demanding an opt out from Schengen is preposterous.

The EU is naturally wary of Britain. De Gaulle was right. It was a mistake to allow the UK to join the EU. Scotland may pretend to be good Europeans in comparison with the wicked little Englander bigots, but that is not going to work if you announce in advance that you will promise to join the Euro but won’t actually do so. It’s like promising to a girl that you will use a condom without ever intending to do so. There is a rather nasty word for this.

Yousaf and the SNP are in the same mess about currency, because the only really good option for Scotland is to keep using pound sterling within a currency union with the other parts of the UK. Using the pound unilaterally outwith a currency union is completely mad. No advanced economy has ever tried to do this. It would make Scottish banking untenable and would involve capital flight because our savings would not be protected. Creating a Scottish pound would be better, but would likely involve a huge devaluation, which would be no fun at all if your mortgage or your pension was denominated in pounds sterling.

Using the Euro would be far preferable to a Scottish pound as once you get there Scotland would have a stable currency used in a large number of EU states. The disadvantages would be that everything we buy and sell with the former UK (i.e., most of the Scottish economy) would have to add the cost and inconvenience of changing currency. Scotland too would have no control over monetary policy as this would be set by the European Central Bank. It’s a funny sort of independence.

Do you really fancy showing your Scottish passport at the border with England and then either changing your Scottish pounds or Euros into former UK pounds? However, they dress it up, that is what the SNP is offering. Worse the SNP is offering uncertainty. First, we use pound sterling unilaterally. No one knows what would happen. Then we create a Scottish pound, but no one knows how long we would keep it. Then maybe we join the Euro. It depends on whether we cross our fingers when me make our promise. This is like changing pounds into US dollars, then into Japanese Yen and finally back to pounds again. You will end up with considerably less pounds than you started with.

Nothing the SNP is offering is better than the currency arrangement we have at present. Worst of all it’s just not serious. We promise to join the Euro but are continually interrupted in the process of getting there. It is as if Yousaf is offering us Euro interruptus, while pretending to be an honest EU member.

Promising to do something while not intending to keep your promise is lying. How can we trust Yousaf on anything if one his chief policies is based on not telling the truth.

The SNP has been in the same mess since 2014, because most Scots want to keep the pound and are horrified with any alternative including joining the Euro. Well, someone at some point needs to point out to independence supporters, if you want to keep the pound you have to keep the UK. The alternative is to make promises you don’t intend to keep. This hardly inspires confidence in anything, least of all currency. Once people cease to believe the promise to pay the bearer on demand you have toilet paper rather than bank notes.