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This was interesting. One takeaway was the reveal - more a confirmation - from @AndrewWilson that a key leverage point for an SNP gov& #39;t in any future separation negotiation would be to threaten to walk away from accepting an effective fair share of UK debt. Thread 1/ https://twitter.com/instituteforgov/status/1331533066125406208">https://twitter.com/institute...
Leaving aside how morally repugnant it would be to leave that debt solely as the responsibility of the people of the remaining UK just after a pandemic in which the UK has borrowed so heavily to save lives & jobs in Scotland, it& #39;s also revealing of SNP strategy in another way. 2/
The SNP& #39;s currency strategy for secession is & #39;sterlingisation& #39; - unofficially using the £ outside a monetary union. But it& #39;s now widely accepted that this plan is fatally flawed as it would create an economic crisis & likely bankruptcy for the new state. 3/
Sensible folk, even on the pro-separation side, are pointing this out in explicit and detailed terms, as seen in this piece from Open Democracy 4/: https://www.opendemocracy.net/en/oureconomy/snp-must-rethink-its-economic-model-independent-scotland/">https://www.opendemocracy.net/en/oureco...
In the words of one of Scotland& #39;s most senior economists, the SNP& #39;s plan would lead to a "classic currency crisis" & "national bankruptcy" (Prof McDonald, Glasgow Uni). Wilson & senior SNP colleagues will understand this (they& #39;re far from stupid), so what& #39;s really going on? 5/
It could be that Wilson & co. fully understand the catastrophic implications of their plan & are ready to accept that as an acceptable price to pay, but I suspect they& #39;re actually betting (as in 2014) that the UK will capitulate & offer a formal monetary union. 6/
@NicolaSturgeon has also hinted heavily at this. See this part of this interview with @afneil:
7/">https://youtu.be/pGio8wx-O...
7/">https://youtu.be/pGio8wx-O...
So, might currency union still be the real hope? If it is then it takes wishful thinking to a new extreme. The UK gov& #39;t ruled this out in 2014 for pragmatic reasons, in that it would have many structural downsides. 8/
Reading again the Treasury& #39;s advice to the UK gov& #39;t in 2014, it& #39;s clear that a monetary union with a politically & fiscally independent Scotland would be risky & would push up Gilt yields - a big no with current debt levels. 9/ https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/279460/Sir_Nicholas_Macpherson_-_Scotland_and_a_currency_union.pdf">https://assets.publishing.service.gov.uk/governmen...
