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Osborne’s sandpit politics will backfire

February 13, 2014

sandpitAs usual the Daily Mash says it better than the mainstream media. “Independent Scotland will not be allowed to use British oxygen” reads one of today’s headlines, written after George Osborne ruled out a currency union with Scotland.

Because that’s what his announcement amounts to: a childish confrontation based on the politics of the sandpit. If you want to play it your way, you’re not getting our toys.

The Chancellor’s gambit will backfire because most Scots can’t stand Osborne and they won’t like being pushed around. The Spectator says that the fact that the government is playing its ace card now shows how worried it is about the referendum result.

Opinion polls continually show a minority in favour of self-rule because many Scots are either scared or apathetic. But the widespread dislike of Conservatism north of the border might translate into action if people feel they are being pushed around too much. Osborne would probably do better not to antagonise the undecided.

Nicola Sturgeon is right to say that if the Tories rule out a currency union then Scots aren’t obliged to take on their share of British debt. Given that the pound is partly Scottish property, if they’re denied the right to use it why should Scots feel obliged to burden themselves with its associated liabilities ?

She’s also correct that it isn’t the Chancellor’s place to rule out a currency union. Parliament will vote on the issue, and they’re likely to think carefully before cutting ties with England’s biggest export market.

It’s not often I agree with the right-wing Adam Smith Institute, but they’re correct that Scotland should use the pound anyway, even if Osborne says otherwise.  Plenty of countries use the US dollar without asking the permission of Washington.

The euro’s a no-no. A Scots pound would cost too much, and investors in Scottish debt would demand higher interest rates in an untested currency. Public spending would have to be lower than in the rest of the UK despite the SNP’s social-spending ambitions.

Until now the independence debate mostly seemed civilised and demure — even at times inconsequential. It’s just turned nasty, and Osborne may live to regret delivering the latest volley.

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