If Alex Salmond’s speech today was intended to be a “deconstruction” of Westminster’s warning (delivered by the triumvirate of George Osborne, Ed Balls and Danny Alexander) that the UK would not form a currency union with an independent Scotland, it didn’t go to plan. His opening gambit was to suggest, as Nicola Sturgeon did last week, that Osborne and others are simply bluffing. After a vote in favour of independence, “enlightened self-interest” would lead the Treasury to agree to share the pound. But all of the public – and private – statements by the unionist side suggest that this is no bluff: they really are not prepared to risk the health of the UK economy by placing it in an unstable currency union with a country with a decidedly poor fiscal outlook and a banking sector 12 times its GDP.
In a tacit admission of as much, Salmond went on to make two other main arguments against denying Scotland the pound. The first was that it would impose transaction costs of around £500m per year (dubbed “the George tax” by Salmond) on UK businesses: “I am publishing today an estimate of the transactions cost he would potentially impose on businesses in the rest of the UK. They run to many hundreds of millions of pounds. My submission is that this charge – let us call it the George tax – would be impossible to sell to English business.”
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