Blogging from the Highlands of Scotland until I return to the Murcia region of Spain in the Autumn for a month or so
'From fanaticism to barbarism is only one step' - Diderot

Tuesday, 14 October 2008

Labour and the SNP squabble over financial crisis and its implications for Scotland's future.

Gawd give me strength! Have the SNP and its hangers-on and Labour and its hangers-on nothing better or more productive to do with their time and energy right now than to squabble like children over whether the current financial crisis will affect Scotland's prospects as a continuing member nation of the UK or as an independent nation, positively or negatively?

I'm not sure quite who started this squabbling match although I think the first 'skirmish' I saw was yesterday (Monday) in a couple of the SNP-leaning blogs that I read regularly (here and here), followed in pretty rapid succession this morning by a Labour leaning blog I read here. Then I noticed that Labour, in the august personage of Prime Minister ("I don't want to make a political point, but ...") Gordon Brown has appeared portentously saying that Scotland would not have had the resources on its own to have 'rescued' the two nominally-Scottish banks included in those 'rescued' by the British government, followed in quick succession by Scottish First Minister Alex Salmond describing as 'ridiculous' such claims. I reference a BBC report which addresses some of these issues.

I've no doubt that this will be a fertile subject for study by economists and political strategists in months and years to come, but I think that it is highly-inappropriate right now, whatever view you happen to take of the role of Scotland either within a continuing UK or separated from it. We have much more important things to worry about right now!

When the time comes to look at this issue, however, I think it will need to be subjected to a greater degree of analysis than the 'bullet point' summaries the two sides of the arguemt have attempted so far. The SNP, for a start, makes many assumptions about the role Scotland might play post-separation/independence in the EU and about the repartition of oil and gas reserves in the North Sea following on from it; similarly the Labour Party wishes to look at present-day political realities as a guide to how a post-separation/independence Scotland and the rest of what had been the UK might organise themselves. For example, as an analogy, it would be relevant to look at the relationship between the UK and the Republic of Ireland before and after the period when the Irish currency maintained a fixed exchange rate (at parity) with the UK currency; that is the point, in my view, when Ireland's destiny economically-speaking might have been said to have begun to diverge from that of the UK; the decision of Ireland to merge its currency and economic policy within the Eurozone merely continued this process, it did not start it. In the case of Scotland the disproportionate importance of financial institutions incorporated in Scotland within the UK economy is a very important factor; both the RBS and HBOS conduct a majority of their activities outside Scotland and in the case of RBS in particular a very significant proportion of its activities in recent years is outside the UK and the EU entirely. There are a great many imponderables about how a post-separation/independence Scotland might have dealt with current circumstances, always supposing that the current events affecting either/both the RBS and HBOS could have or would have happened were not Scotland within the UK. We really cannot say for certain, whatever view you take of the merits/demerits of independence/separation. Just for starters, would a 'UK' without Scotland have followed the same policies over the past few years without Gordon Brown as Labour Chancellor and would a putative Scottish government have followed significantly different policies than it has within the current UK? Similarly, would financial services regulation have followed the same pattern in Scotland or in the rest of the currently-defined UK if the currently-defined UK had ceased to exist some years ago?

In other words I believe the petty bickering between partisans for the SNP and Labour of the past few days (and continuing this evening) is completely pointless (although the implicit assumption that the EU has collectively provided a support package is not exactly how it happened, from what I can gather, rather it is a case of coordination of independent national responses of countries within the Eurozone, largely to accommodate the [justified] scruples of Germany about supporting a pan-Eurozone support package). No doubt a proper and rational analysis of the economic relationships between Scotland and the present UK and between it and a post-Scotland UK is possible, and desirable, but I believe that in the midst of the current crisis is not the time.

Finally I do not believe that anything about the current crisis relates specifically to the size of the national economies involved, rather it relates to the regulatory regimes in place; yes a 'small' country such as Iceland has been hard hit, but so have been countries with large (the UK) and huge (the US) economies. However, other countries have not been so massively affected, both large and small, because they have in practice had in place more robust internal regulatory regimes even if the globalised economy in which we all operate has left them almost as vulnerable as everyone else. To summarise, knee-jerk reactions attempting to favour one view or the other relating to Scottish separation/independence from the UK are the last thing we all need right now.

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