17

The SNP (Scottish National Party) have made a big thing during their conference this weekend about their plans for their currency should they gain independence from the UK. However, their current key tenet appears to be rejoining the EU - at which point, surely, they would be obliged to join the Euro as soon as the necessary economic conditions were met?

How are they resolving this obvious conflict, if at all?

  • 5
    It's one of those things that although obligatory is not exactly enforced (check this answer). The SNP knows perfectly well that they will be able to maintain their own currency if they so desire. Likely none of the other members would complain about it unless Scotland would start doing some detrimental currency policy. Typically the EU negotiates some kind of rate of exchange between both currencies to avoid abuse from either side. – armatita Apr 29 at 13:09
  • 3
    @armatita: Then again, the SNP plan apparently is to keep the UK Pound, and that's not exactly similar to any existing situation for a multitude of reasons. To name the most obvious: it's controlled by a non-EU member which has in fact left the EU. It is pure speculation what the EU will require as part of Scotland's re-admittance. – MSalters Apr 29 at 16:35
  • @MSalters True, I was not aware of this at the time I wrote that comment. It's an unusual situation. I don't think there is a precedent and I doubt this would be acceptable long term by the EU. – armatita Apr 30 at 8:16
  • @MSalters (a) the plan agreed at the most recent conference is to switch to a new currency "as soon as practicable"; (b) the UK has not in fact left the EU and may never do so; (c) the process is not speculation: europarl.europa.eu/RegData/bibliotheque/briefing/2013/130437/… ; it seems unlikely that unusual requirements would be imposed on Scotland, which by definition already complies with the acquis communitaire. – pjc50 Apr 30 at 8:38
  • @pjc50: The problem with that is that Scotland meets the acquis communitaire because they use the UK Pound. (Chapter 17). Introducing a new currency requires new financial institutions, which will need to prove their worth. – MSalters Apr 30 at 8:57
2

The SNP leadership hadn't intended the currency question to be "a big thing" at the conference. The original intent was just to ratify their Growth Commission report.

However, the policy was changed, through an amendment proposed by some of the membership, to move to a new currency as soon as possible.

This raises two questions: Why would the membership risk the conference narrative being one of division? Why would the leadership of the party for Scottish independence not want an independent Scottish currency?

The answer to first question is fairly straightforward. An independent currency is the symbol of a truly independent nation. If you had campaigned for years to be independent of England, it's not hard to see that being a junior partner in a currency union isn't something to get excited about.

Economically, it's not quite so clear cut but if you're bullish about Scotland's economic potential, as SNP members tend to be, there's a lot to be said for being in direct control of monetary policy.

So, if it's all roses, why are the SNP leadership being so circumspect? It could be that they're less convinced about Scotland's outlook but I doubt that that's the case. I believe the reason is more concrete: their relationship with the EU.

It will be a central plank of a second referendum campaign for Scotland to rejoin the EU. There's the obvious point that SNP were the main party of remain in Scotland (and Scotland voted to remain). More important, though, is that Brexit is the sole justification for a second referendum happening at all. Even Ms Sturgeon said that it was a once in a generation decision.

In the first referendum, the EU were against independence and that hurt the independence campaign quite badly. It was also at a time when the Euro was quite toxic so joining the Euro, SNP policy up to that point, was a non-starter. The combination of these things made the economic argument against independence pretty strong.

So what's changed? Brexit is the main one. It is highly likely that the EU will now look much more favourably on Scotland rejoining the EU (after it was forced to leave) as against unilaterally leaving then trying to rejoin. Having the EU welcome back Scotland with open arms will play very well for the independence campaign.

Except it probably won't now. It is, as pjc50 says, a requirement to seek to join the Euro for new members of the EU (which Scotland will be). If Scotland were still in a Sterling union, it would be entirely possible to maintain the superposition that Scotland will both join the Euro and have a new currency. At least till the relevant treaty is ratified. At which point it's not an independence issue any more.

But it is not possible to maintain the fiction, that you will join the Euro, if Government policy is to create a new currency asap. The EU will be forced to state that that policy is incompatible with EU entry and SNP will be back to where they were in the first referendum. If not in a worse position. So I wouldn't be surprised to see the SNP leadership attempt to water down the policy between now and any referendum campaign.

  • I think that Scotland's economic potential is very much the 'Elephant in the room' in any independence discussion. The SNP's plans at the last referendum seemed to be almost totally oil-focused, which I see to be very unstable in the long-term as the world moves away from an oil-based economy. Have they changed their focus since? – Nick C Apr 30 at 12:12
  • @NickC I would expect that the brunt of the rhetoric will be how crappy are the economic decisions that England make and foist on Scotland. I doubt they'll focus on oil much unless they have no choice e.g. there's a major increase/decrease in the oil price during the campaign. And for that reason, they'll push super hard for a poll soon after Brexit. They'll want the parties of Union to be linked to Brexit and they'll want a Tory/Labour joint effort to be impractical. – Alex Apr 30 at 12:43
18

The SNP's long term goal is independence for Scotland. During the last referendum on the subject, the issue of which currency Scotland would use was an important point of contention. The legal situation is somewhat unclear and, possibly as a tactic to convince voters to remain in the UK, the UK national government suggested that they would not want to share control of it with Scotland.

Control is obviously quite important economically. Currency controls are used to control the economy overall, such as by adjusting interest rates to control inflation.

As such the SNP is seeking to resolve this question. Many people are, for a variety of reasons, sceptical of joining the Euro. It is not an absolutely requirement for membership of the EU; in fact the rules merely say that the country must work towards joining and some, including the UK, have permanent opt-outs.

So the short answer is that the SNP is seeking to show that it has an answer to this difficult question, which will hopefully satisfy enough voters to win a future independence referendum.

  • 4
    I think that Denmark is the only other country with an explicit opt-out under the Maastricht Treaty. The remaining seven EU countries without the Euro have just dragged their heels, and the EU hasn't seen fit to press them on the issue. – Michael Seifert Apr 29 at 14:56
  • 7
    "...possibly as a tactic to convince voters to remain in the UK, the UK national government suggested that they would not want to share control of it with Scotland." This is what I'd refer to as a significant understatement. – The Dark Lord Apr 29 at 16:59
7

they would be obliged to join the Euro as soon as the necessary economic conditions were met?

The second part of this sentence is doing a lot of work. The criteria are quite onerous and many of the current Eurozone members no longer meet them; they are also fairly easy to game if a country does not want to join the Euro.

The reason so much effort is being put on this now is that it was perceived as one of the biggest weaknesses in an otherwise fairly detailed manifesto for independence, and the campaign is being properly restarted following the disastrous handling of Brexit by the UK government earlier this year.

  • @brythan yes thanks, fixed – pjc50 Apr 30 at 8:11
1

The SNP do not believe that Scotland would have to join the Euro.

The other answers are correct. However, I thought I'd add an interview which Nicola Sturgeon, leader of the SNP, gave within the last week which clearly answers this part of the question.

How are they resolving this obvious conflict, if at all?

https://youtu.be/gNFKII1C8gI?t=150

This is a lengthy exchange but it gives the SNP's current response that this line of questioning very directly.

Interviewer: You're also setting out a new plan for the currency. You now want a new Scottish currency after independence. There's been some confusion about how the Euro would fit into that picture. The opposition is that Scotland would have to commit to join the Euro but wouldn't necessarily ever intend to do so. Is that right?

Nicola Sturgeon: Well, Channel 4 have, I think, with the greatest respect, got this slightly wrong in the recent past. You only have to look at countries already within the European Union. Sweden, which joined the European Union after the commitment to be in the Euro was in place and is not in the Euro, has no intentions of joining the Euro and the European Union has no intentions of trying to force them into the Euro. Jean-Claude Juncker is on record as saying it's not the business of the EU to force any country into the Euro. So this argument that Scotland would somehow have to be in the Euro simply doesn't bear up under any scrutiny.

Interviewer: You're quite right. Sweden isn't in the Euro and shows no intention of joining any time soon. But they have committed to joining the Euro, as have the Czech Republic, Hungary, Poland, Romania, Bulgaria and Croatia. None of them in the Euro, but they've all committed to joining the Euro. So, just for clarity so that people understand, you would commit to joining the Euro but you have no intention of actually doing so?

Nicola Sturgeon: Well, we would have discussions with the European Union about the basis of an independent Scotland's membership but...

Interviewer: But those are the rules, First Minister.

Nicola Sturgeon: I think what people have a right to know is, could Scotland be forced to go into the Euro? And that's the fundamental point. None of these countries that you have just read out to me there...there is absolutely no suggestion by anybody that if they don't want to go into the Euro that anybody will force them to go into the Euro.

Interviewer: Absolutely. And Bulgaria have actually told us that they could stay out of the Euro indefinitely.

Nicola Sturgeon: Well, isn't that the key point?

Interviewer: But they've also said that they're committed to joining the Euro, which are the rules of membership. So you would be committed to joining the Euro. You don't seem to be willing to say that for some reason. Maybe you think it's politically toxic to do so?

Nicola Sturgeon: Well, it's not politically toxic.

Interviewer: Well, then say it.

Nicola Sturgeon: You have demonstrated that it doesn't mean very much. If countries say, "Well, we've committed to something but everybody knows that there's no way of forcing us to do it."

Interviewer: If it doesn't mean very much then you should have no objections to saying, "Those are the rules. That's what we'll do. We'll do the same as everybody else."

Nicola Sturgeon: I'm not going to sit here right now and anticipate the discussion and the details of the discussion that we would have with the European Union. The fundamental thing for Scotland is that we couldn't be forced to be in the Euro, and I think that's what most people in Scotland would want to hear me address.

The short answer is that the SNP do not believe that Scotland would have to join the Euro after independence. Clearly, they can point to other countries in the EU which don't have to opt-outs which the UK and Denmark have but which are nevertheless not in the Eurozone. Sturgeon is at pains to argue that Scotland could stay out of the Euro if it wants just like these other countries. As she says, the requirement to join the Euro "doesn't mean very much". She probably appreciates that Scotland would technically be required to commit to membership. As the interview demonstrates, she clearly isn't willing to state that publicly.

As the other answers state, the main reason for focusing on currency plans is to try and convince sceptical No voters for whom currency was a stumbling block to voting Yes in 2014. Broadly speaking, the SNP believe that if they can satisfy the concerns of people on currency and talk up the threat of Brexit that they have a good chance of winning a future independence referendum.

Since they don't believe that the EU's rules on Euro membership could for much their preferred option is now a new Scottish currency, not the Euro.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.