It is perhaps inevitable that the Tories and the No camp in the Scottish referendum have reacted to recent poll results by panicking. The three stooges abandoned Westminster and rushed North to quell this rebellion. They have since engaged in a bombardment of the Scots with tales of doom that Edward Longshanks would probably argue is going a bit too far. No longer project fear, more project terror. Now while Im the first to agree that the SNP havent exactly sold the idea of Scottish independence terribly well, these paranoid fantasies of the no camp need to be debunked.
Let us start with the suggestion that many of Scotlands banks will have to flee Scotland screaming in a mad run to the border, as they are forced to relocate to London. I found Lloyds announcement of moving its headquarters down to London somewhat odd, given the fact theyre headquarters is already listed as being in London. Furthermore, the Royal Bank of Scotland is just the trading name of the old Nat West, so ya it wont be a surprise if they decided to reorganise post-independence.
The central flaw in the no camps logic here is that they seem to think Scotland is some sort of tinpot dictatorship in Africa. There plenty of EU states, many with a GDP lower than Scotland and a smaller population (and no oil!) who get by just fine. They can borrow money, often at the same rates as the UK government, and maintain their economies without any major quibble. Baring a lurch to communism post-independence (and this seems to be the assumption of the better-off-dead-campaign), there is no reason to doubt that the Scottish economy will get by. Yes, no or devo max, life will go on, people will need to pay their bills and their mortgages/rent, buy things and run their businesses.
Iceland recall went through one of the most spectacular economic collapses in recent history, with its entire banking system going to the wall and the country effectively defaulting on its debts. Did the country explode and sink back into the Atlantic? Well I was there last year, Im meeting some friends later on this week whove just come back from Iceland. And while its been a rough few years, the country is certainly still there, still open for business and still not-so-reassuringly expensive.
Indeed Im writing this from Ireland. The only sign youll have that you’ve crossed the border from Northern Ireland to the Republic is a sign indicating that speed limits are now in kms (or miles going the other way) and the fact that if you stop in a petrol station they use a different currency. Although that said, many shops either side of the border, have no problem taking euros instead of pounds or pounds instead of euros. Even down in Cork or Dublin if youre using a Sterling area credit card most retailers will be happy to conduct the transaction in Sterling instead. Indeed Id argue its easier to use sterling in Ireland that it is to use a Scottish Sterling note in England!
Now in the (still unlikely) event of independence, it would hardly be a surprise that any company would engage in some reorganisation. There will be something of an economic correction and Im not sure if the SNP are being realistic about the consequences of this (like I said, I havent drunk the SNP kool aid any more than Ive drunk the no camp stuff). For example I cant see how ship building on the Clyde will continue post-independence. Its possible that some companies, such as Standard life (or the banks) might need to relocate some staff down south.
However its also worth remembering why they are located in Scotland in the first place, i.e. lower running costs compared to Southern England. Now given that those circumstances wont have changed why would any company follow a strategy that would result in higher running costs and a lower profit margin? What school of finance did you study? And the idea that Scottish banks would flee the country where many of their customers are located is of course ludicrous.
But what about customers in England? If Scotland is a foreign country shouldnt English customers be worried about their money?
Well keep in mind that if youve signed up to any financial deal with the Post office you are aware that those products are ultimately provided by the Bank of Ireland? Also anyone with an account in Clydesdale bank, youre aware that Clydesdale are a subsidiary of the Australian National bank? (where I suspect someone is making comments right now about whinging poms and daft dingos). And lets not mention Abbey National, Alliance & Leicester or Bradford & Bingley, all trading names of Banko Santandero en Espana. One cannot escape the irony of the Daily Mail predicting that someones money isnt safe in a Scottish registered bank in the event of independence, then ignoring completely how many millions of Britons have savings tied up in the more troubled regions of the Eurozone.
While the SNP have been quick to call fix as regards these pronouncements, I suspect a certain element of pragmatism is in play. The bank bosses recall bitter memories of the Northern Rock and they are all too aware that some of their customers read the Daily Mail and are panicking about independence. As a result, they have to appear to be doing the same.
And naturally Camerons admission that his government has done no perpetration whatsoever for the possibility of Scottish independence, at least until last week, has hardly helped matters.
Sterling in trouble?
The media have also been pointing to falls in sterling. This was good news for me, as Ive been looking for an opportunity to transfer some cash from the Eurozone into Sterling recently (part of the deposit for a house). However, I realised once I checked the market data (which Im assuming most of the media were too lazy to bother doing) that sterling is currently well above its average over the last year value next to the euro. Theres been a slight drop yes, but hardly dramatic. So Im holding off transferring the money until there is a genuine fall in value for the pound (fingers crossed for a yes vote!). In short these claims are clearly an exaggeration.
Meanwhile Tescos started blabbering about how much food prices are going to go up. Again, that there would be a correction in the event of independence would come as little surprise. But the rules of capitalism say that while some prices will go up, other items will become cheaper.
For example, The Guardian did a price comparison recently and they noted that in Ireland the price of certain items, notably cheese, potatoes and beef are generally cheaper than in the UK (hardly a surprise, the stable of the Irish diet!), although other items such as milk (this being a touchy subject in Ireland with accusations of price fixing by the dairies), processed foods or vegetables (prices for these have fallen recently mind) are all higher. Although it should be remembered that Ireland has a higher GDP and higher VAT rates than the UK, so prices being higher would be expected (whats more surprising is how some things are cheaper!).
Other items, such as Alcohol or Heinzs Ketchup are about the same price in Ireland as the UK, although that depends. Some beers and wines (such as the Chimay Bleu I bought today) are cheaper in Ireland, presumably because the producer operates in the Eurozone. So one would expect post-independence in Scotland that the normal rules of capitalism would exert themselves. Meaning that the prices of some commodities would go up yes, but equally certain items, in particular anything produced locally or in particularly high demand (deep fried mars bars? Square sausages? :D), would see falls in prices.
And while Ive not heard the No camp bring it up yet, one assumes they will at some point start wailing about Scots loosing access to the BBC…lets see Im in Ireland now…turning on the TV…oh I seem to be able to watch all 4 BBC channels okay…and C4…and UTV…yep! all coming through just fine from here!
Here in Ireland you can get British TV channels via Satellite, Saorview (Irish Freeview) or cable. We also have of course RTE in Ireland (our own version of the Beeb) as well as TG4 and TV3. Again Im not saying everything will be rosy in the SNP garden, just pointing out that the world isnt going to come to an end in the event of independence.
Down with that sort of thing
As Ive long pointed out many times on this blog, Im minded to support independence in principle, but Id still argue that the SNP dont give the impression theyve thought through the process of independence and its consequences very carefully. My view of the SNP is that theyve watched Braveheart once too often. However the sort of you’re doooomed! propaganda of the no camp is the sort of thing that would make me vote yes if I could…
…And that is perhaps the danger for the no camp. We have a lot more referendums in Ireland, and theres always a risk of such negative campaigning going from standard FUD (fear, uncertainty and doubt) to farcical. Id argue the no camp have now jumped the shark in this regard. And thats this sort of paranoia is exactly what could drive more people into voting yes if the no camp are found out. I mean even groundskeeper Willie is planning to vote aye.