Currency union plans are incoherent, claims Carmichael

The Scottish National Party’s plans for a “currency union” between an independent Scotland and the rest of the UK are increasingly complicated and unclear, isles MP Alistair Carmichael claims.

Speaking in the wake of a report released on Tuesday by HM Treasury which challenged the SNP case for a currency pact in the event of the electorate voting “yes” in next year’s referendum.

The treasury outlined how the proposed currency pact would constrain an independent Scotland’s tax and spending policies.

Highlighting the Eurozone, the report also explained that currency unions did not necessarily add any additional protections against funding problems.

Mr Carmichael said: “The SNP would have us believe that a currency pact is an easy option. In fact their plans look increasingly complicated and unclear.

“A currency union of the sort they propose would require a mass of arrangements and common agreements which would, as the report today makes clear, constrain Scotland’s fiscal freedom.

“Above all else, there is no guarantee that Scotland could even join the pound – that is a deal that would require negotiation between an independent Scotland and the remainder of the UK.

“The more that the case for independence is scrutinised, the faster it unravels. On a question as basic as the currency that an independent Scotland would have there are no coherent answers.

“An independent Scotland would have no influence over the Bank of England but would still effectively be under its control.”

In a speech in Glasgow about the proposed currency pact Chancellor George Osborne said the move would be a “dive into unchartered waters” and questioned whether the rest of the UK would want to “give away some of their sovereignty over monetay and potentially other economic policy”.

He added: “Let’s be clear – abandoning current arrangements would represent a very deep dive indeed into uncharted waters.

“Would a newly independent Scottish state be prepared to accept significant limits on its economic sovereignty? To submit its economic plans to Westminster before Holyrood?”

However, the Scottish government has dismissed the concerns and Scottish finance secretary John Swinney said a currency pact could easily work in Scotland’s – and the UK’s – interests.

He told the BBC <i>Today</i> programme: “What the Treasury’s paper is designed to do is to make things sound as difficult and obstructive as possible and I don’t really think it is a helpful contribution to the debate.”

If voters back independence Scotland would have four currency options: a currency union, join the euro, keep using sterling, or adopt a new currency.


Add Your Comment
  • Stewart Mack

    • April 23rd, 2013 14:08

    So Mr Carmichael MP thinks a currency union would be difficult due to the negotiation that would be required. Normally i would think that negotiation would be a reasonable proposition but i can understand why the whole Lib Dem elected representatives have a problem and want to shy away from anything involving negotiation, afterall just look at the coalition, the Lib Dems “negotiated” their way to the very “poor” (for want of a better word) … end of the stick now didnt they

    Whether you support them or you dont, only SNP are offering a clear, identifiable option for change. To my mind things cant stay as they are, and i think most people would agree with that, but whether independance is the right answer only time will tell. Rather than knocking or scaremongering how about the other parties, Mr Carmichael’s included come up with a real viable alternative for the change the Scottish people (appear to) want- all i hear at the moment is rhetoric from the other parties, too afraid to actually come up with an alternative option. So come on now, rather than “calling2 for this or “protesting against” that, Mr Carmichael, put pen to paper and tell us exactly, in fine detail what your party can bring to the table. At the moment i am sad to say I see very little

  • Martyn Fisher

    • April 23rd, 2013 14:29

    Think this is a bit of a Red Herring. I mean the Isle of Man has the pound. Think Scotland would be in good position. Cant see the Bank of England being to happy losing out on the 3 Billion of deposits that cover the issue of Sottish bank notes.

  • Harry Dent

    • April 23rd, 2013 15:10

    Liberal condemns nationalists for lack of clarity.

    Pot. Kettle. Black.

  • Donald Murray

    • April 23rd, 2013 15:16

    I’m not sure why or how Martyn Fisher thinks the Isle of Man is any kind of parallel. It’s much smaller than Scotland. It’s also as a Crown Dependency in a very different relationship with England than the Scottish Government intends us to be. Much more relevant is Ireland which had a currency linked with Sterling from its independence till 1979. I’ve yet to meet any informed Irishman who thought that relationship was of any benefit to them. The interests of the UK always took precedence….

    In fact, Ireland’s boom (for as long as it lasted) was attributed to a break away from sterling, not remaining with it as the Scottish Government – for some foolish reason – intends to do.

  • Joe johnson

    • April 23rd, 2013 16:35

    The SNP need to be more clear on the currency in a independent Scotland. I really Dont think they have thought this through. Its not just the currency, the SNP got it wrong over Europe saying Scotland would get in automatically, but the E.U have said no, a newly independent country would have to apply like everyone else. I really Dont think salmond has thought this through

  • Martyn Fisher

    • April 23rd, 2013 18:06

    Well i am very sorry Donald Murray yon is just rubbish. I was living in the Irish Republic when the change over went on. I was in Dublin, Euro came in big boost in my bank balance… No not really. The Celtic tiger did not go down the tube becouse of the Euro. It went down becouse of the influx of eastern euoropean workers and credit crunch. I am not rascist i was in Ireland for the same reason. A quick buck… The people of Ireland voted no the first time around to giving unlimited access to Polish people. However arms where twisted up backs to vote ok in second vote.. Ireland was over extended it will recover… I loved my ten years, great country great people they will come through this learn by mistakes and be stronger for it. my friends tell me things are picking up. Scotland will have problems but scotland will pull together and come through anything that is chucked at it.. Happy Saint Georges day…

  • Martyn Fisher

    • April 23rd, 2013 18:14

    Irelands boom was well going before the change to the Euro……

  • Ian McCormack

    • April 23rd, 2013 18:58

    I was listening to Radio Scotland this morning (Tuesday) and as Martyn Fisher has pointed out already, The isle of man is an INDEPENDENT country, with 2 seats in Westminster, where the Prime minister and the Chancellor of the isle of man’s privy council, hold those seats. They have their own currency, which their exchange rate is set at 0% in exchange for the UK currency. They also pay the UK Govt.. for armed forces protection.
    If this tiny wee island can do it, then why not Scotland.

  • Gordon Harmer

    • April 23rd, 2013 19:54

    So Stewart Mack thinks that the SNP’s policies on joining the EU and NATO as well as which currency an Independent Scotland would use are clear and identifiable. How about what kind of pensions can pensioners expect will benefits change or how much more tax will we pay, clear and identifiable? Even what kind of a defence force will we have, will outlying Islands have any more autonomy, etc, etc, clear and identifiable?

    Stewart the other parties and the majority NO camp are giving an alternative and that is the status quo, it aint broke so don’t fiddle with it. As far as rhetoric goes the SNP and their followers are masters of it and your comment is a perfect example.

    How about you put pen to paper and tell us all just what the SNP’s policies are especially the clear and identifiable ones. Independance nor independence is the right answer and we sure cant go into it on a time will tell basis. In the event of a yes vote swiftly followed by a bankrupt Scotland we don’t get a chance to vote out of it in another four years. We are stuck with it for ever so come on Stewart please spell out the clear and identifiable option for change you advocate.

  • Donald Murray

    • April 23rd, 2013 22:09

    There is an interesting rewriting of history and reality going on above…

    First of all, Ian, the Isle of Man is a ‘self–governing Crown Dependancy’ where the ultimate responsibility for ‘good governance’ rests with the Crown – in practise the Government of the United Kingdom. No ‘island’ that cedes responsibility for its armed forces and foreign affairs to another state can be said to be truly independent. Neither does the IOM offer any kind of realistic parallel with Scotland. How can it possibly have?

    Martyn – I also have long experience of Ireland. For much of its history as a state with its currency linked to sterling, the country was in the economic doldrums as anyone can check. (For many years, its greatest exports were its peopl – a fact that can be easily checked.) As for your claim that Ireland’s problems were solely caused by immigrants, this is an utterly inaccurate statement. Instead, they were largely caused by its own elite – whether politicians, businessmen or (as here!) bankers. The level of corruption makes ours pale by comparision.

    You also get your facts wrong in other ways.The change in Ireland’s currency status did not begin with the Euro as you seem to think. It began with Ireland entering the ERM at the end of the seventies. Ireland joined the Euro over 20 years later – when you were in Dublin. It’s a place that I was familiar with quite some time before.

    So to sum up in your own words, Martin, ‘yon was just rubbish’. Take a tip from me, Mr Fisher. You really have to check your facts before you rush into print!

  • Donald Murray

    • April 23rd, 2013 22:11

    PS – One or two gremlins got into that last entry – but not as many as riddlled Mr Fisher’s daft contribution to debate. Sorry!

  • Joe johnson

    • April 23rd, 2013 23:19

    Ian McCormack, The SNP wants full independence from the UK. They said Scotland will have a joint defence force with the rest of the UK. But the UK goverment says no. The SNP said Scotland will get automatic membership in the E.U. But the E.U says no. Newly independent countries have to apply like all newly independent countries. The SNP want to keep the pound sterling, but the UK has said this will not work in a independent Scotland. It seems the SNP has not thought this through. This is misleading the Scottish people.

  • Donald Murray

    • April 24th, 2013 7:49

    And finally, can I say how dismayed I am by the contributions of Messrs Fisher and co to this debate – for the following reasons?

    1 How anyone can give the example of the Isle of Man as an independent state utterly bewilders me. One would have thought the very word ‘dependency’ would be a clue to its true status that any intelligent and educated human being would have been able to pick up on, but apparently not…

    2 Mr Fisher could have done some basic research into when Ireland broke its links with sterling. If he had done so, he would have discovered it was a lot earlier than when they joined the Euro – but then why let facts get in the way of a poor argument? It’s so inconvenient.

    3 Mr Fisher claims that his argument about immigrants is not racist. Methinks he protests too much. An Irish friend of mine used to get really annoyed every time Irish people complained about immigrants to their country. (‘As if we haven’t produced enough of our own and sent them to other nations,’ he used to say.) Unfortunately, Martyn, there has always been more than a tincture of racism in the nastier extremes of Irish nationalism. The name ‘Sinn Fein’ is a bit of a clue. So, sorry, Martyn… Your argument is racist!

    4 It would really be useful if people who used words like ‘rubbish’ in their arguments made sure that they were not recycling prejudice and utter falsehoods in their own. Could Martyn please do us all a favour and check things out before he comes out with emotive words like that? It might even improve his own standing among his fellow SNP supporters.

  • Johan Adamson

    • April 24th, 2013 8:59

    But if Shetland runs off with some of the oil reserves and becomes the Dubai of the north (imagine that, skyscrapers and no taxes (can we import the sun??) then where does that leave the rest of Scotland and its balance of payments and what currency will we go with? I dont suppose we will need to worry much as it will be a petro-currency

  • Martyn Fisher

    • April 24th, 2013 9:40

    I am sorry if i offended anybody with my “Yon is just rubbish” comment.

    (1) What i said in my comment was that when Ireland joined the Euro on 1st Jan 2002 the Celtic Tiger was well under way before that. I lived there i witnessed it.

    (2) I really do not think i am rascist, If i had been Polish i would have come to Ireland to get work. I was from Scotland i went to Ireland for work. I did not say the sole reason the Celtic Tiger crashed, was becouse of the influx of Eastern Europeans but it was part of it. The credit crunch was the biggest factor. Intresting to note that the in the 10 years i worked in Ireland i was never once racially abused. However when i returned to work in England to work well i got plenty of it. Go back to where you come jock or haggis was not uncommon.

    (3) Now as for me being an SNP supporter nothing could be further from the truth yes i support independence, you dont have to support SNP to want independence it is not compulsary, Alex Salmond can get lost, stood in a pub in Peterhead with him once, he bought drinks for everyone bar but me “tight git” To be honest i am not even a big fan of the Scottish Parliment, its first law The Rudell amendment was a total disgrace. Brought in by Jim Wallace no less. However independence is the only way for Scotland. We have a chance to change the way Scottish Parliment works, but no chance to change how Westminster works.

  • JohnTulloch

    • April 24th, 2013 11:11

    I know next to nothing about Ireland however I noticed the other day it is still 7 places (No16) above the UK (No 23) in the 2012 table of countries’ GDP per capita -does this mean the “Celtic Tiger is less sickly than the “British Lion”?

  • Donald Murray

    • April 24th, 2013 11:31

    Martyn – Apology accepted …

    1 Aye – but the take-off of the ‘CelticTiger’ actually took place when the Irish broke with sterling. That took place at the end of the seventies when the Irish Government took the decision to join the ‘Exchange Rate Mechanism’ which boosted its economy. Before then, sterling was ‘a millstone around the country’s neck’. (I’m slightly adapting Alex Salmond’s words there – before he did a complete U-turn and decided sterling was okay,That, of course, happened when the Euro floundered – one cause of the credit crunch you mentioned in your original communication.) Yet nothing changes… Carmichael is quite right when he declares hanging onto sterling is a completely incoherent idea.

    2 You may claim not to be a racist but that statement you were echoing quite definitely was. It’s always been a racist tendency among majority peoples to blame racial minorities for their problems. The Germans did it with their Jews; the Ugandans at one time blaming the Asians in their midst. The fact that some Irish blamed immigrants for their economic woes falls into that category. If you want to find out who was really responsible, read Fintan O’Toole’s ‘Ship of Fools’. The former Taoiseach Charlie Haughey must have been the most corrupt politicians in recent times of any democratic state. Check him out ..

    3 Anyone who comes out with a statement like ‘the only way for Scotland’ always worries me. They remind me of Maggie Thatcher who was called ‘TINA’ for the way she kept saying ‘There Is No Alternative’. Again, I think this is utterly undemocratic. There are always alternatives. No political view is 100% right.

    I notice you are no longer claiming that Isle of Man is an independent country. (One with two representatives in the House of Commons! Wow! That’s independence for you.) Are you prepared to accept that this is utterly, ridiculously wrong – and bordering on the silly?

  • Donald Murray

    • April 24th, 2013 11:43

    Re – John Tulloch

    No. These figures are often distorted by population size.

  • Stewart Mack

    • April 24th, 2013 13:55

    Thank you Gordon for taking the time to comment on my post. You may however wish to read it again. Nowhere, either express or implied did i say that ALL the SNP policies were a) clear or b) identifiable or indeed for that matter c) practical. What i did however say is the the SNP are offering an alternative to what we have at present in the form of independance. The details of which i agree are the subject of debate, and will remain so right up to (and after) Polling Day.

    As you point out yourself, the only real alternative the NO camp are offering is the Status Quo, which I along with many others feel is not a viable alternative. Between them, the whole No camp can only offer knocking of suggestions bringing the whole debate down to little more than a school yard squabble of “he said she said” which is to the detriment of all involved. One thing is for sure, they cant both be right and the truth will out.

    Sure labour and the others have come up with Devo Max in one form or the other but again failed to put even the mildest of flesh on the bones. They are treating the entire population with a “be good and we might give you a wee treat” attitude which belittles both themselves and the electorate as a whole.

    Until there is a realistic alternative for the good of Scotland (and Shetland) then i’m afraid I like many are being pushed towards an option that i do not consider is entirely for the best simply because of their arrogance/ignorance/patronising nature. You can of course make your own mind up but it would appear that you already have. I therefore wish you well in that endeavour, it will certainly not be obtaining my support even though i am no fan of the SNP

  • Douglas Young

    • April 24th, 2013 17:38

    Martyn Fisher is correct in stating neither the SNP nor Salmond has anything to do with Independence, a referendum is a vote for people not politicians and in fact the SNP will be in power before and after the result.
    Shetland will not go it alone, nor will they grab a share of the oil wealth; neither would we be wise to align ourselves with any Westminster Government when they have refused to refund our £30million housing debt, although I would not put it past Cameron to pay it simply to buy votes for the NO campaign. Were Shetland to try more autonomy we would immediately lose our huge travel subsidies paid for by Holyrood.
    There is no collective disability affecting 5.3 million Scots being equal, able and willing to run their own lives.
    To say otherwise would be racist.

  • JohnTulloch

    • April 24th, 2013 17:45


    The wealthiest countries table is from Global Finance Magazine who say it is presented using GDP per capita on a PPP (purchasing power parity) basis to minimise distortion from exchange rate factors – they don’t mention population as a concern.

    I can see that distribution of wealth will be a factor in personal income, however.

    GF Magazine say “…using a PPP (purchasing power parity) basis is arguably more useful when comparing generalized differences in living standards on the whole between nations. This is because PPP takes into account the relative cost of living and the inflation rates of the countries, rather than using just exchange rates, which may distort the real differences in income. This is the measure most economists prefer when looking at per-capita wealth and when comparing economic strength between countries and living conditions or use of resources across countries

    Read more:
    Under Creative Commons License: Attribution Share Alike

  • John Tulloch

    • April 24th, 2013 21:57


    Providing any deals on autonomy are settled in time for the SIC to make a recommendation on whether they see it in Shetlanders’ interests to vote “Yes” or “No” then the loss of the travel subsidy, should it happen, need not prevent us from becoming autonomous since it would be in the context of gains from natural resources taxes and increased control of fisheries, to name but two.

    Faroe is at least two hundred miles more remote than Shetland yet they have a population of more than twice that of Shetland and seem to be pretty prosperous – what happened to their travel subsidy when they became independent in 1948 ( I don’t know)?

    Why does it induce such panic in the “Yes” lobby when people talk about Shetland making off with her share of the oil, haven’t you noticed that Denmark and Finland, neither of whom have huge resources of oil and gas are doing very well as small independent countries?

    Or is there a tacit acceptance by the “Yes” lobby that Scotland can’t make it on its own without grabbing all the oil?

  • Johan Adamson

    • April 25th, 2013 9:16

    John Tulloch – do you think there would be deals? Do they care enough about our vote – given our small population?

    When Faroe is brought up as a success, people always say they are subsidised by Denmark – is this true?

    I would also challenge our thinking on ‘remote’. Why do we think we are remote? Surely its because we are told to by the BBC and others. The wealth in Aberdeen and the rich natural resources here are largely ignored by national media, lets not follow suit. I dont think Dubai thinks its remote or worries about travel subsidies when it has so much in terms of oil wealth. It thinks it is the centre of the universe and controls our wealth. Through oil prices are we not paying for the reclamation of land and building of property in Dubai? why worry about what currency we have if we have oil, and other resources.

  • JohnTulloch

    • April 25th, 2013 11:39


    Interesting points.

    Yes I do think deals are possible and so do the MP, MSP and SIC. The reason being that the islanders’ “right to self-determination” is important and it is broadly accepted that if Shetlanders vote “No” that they will have the right to take their business elsewhere, in particular, to the options outlined by the Orkney and Shetland MSPs which include Crown Dependency and Faroese-style autonomy, possibly, linked to an independent Scotland, should that transpire.

    If our negotiators are unable to reach a satisfactory deal with the SNP they should spread their net, at least, to London who will be very pleased to accommodate us with a deal to let them maintain a presence in the North of the British Isles.

    My understanding is that Faroe receive a considerable subsidy from Denmark, presumably, negotiated with a view to preventing Faroe joining Iceland instead of Denmark i.e. pretty much the same reasons as why London would be pleased to keep Shetland (and Orkney) with them – strategic waters, mineral resources, fisheries, etc.

    Agree 100 percent about “non-remoteness.” With increased wealth from local control of resources, tax, etc., as you say travel is unlikely to be a major problem.
    Let’s face it, Greenland is a heck of a distance from Denmark and IMO the loss of the travel subsidy is another red herring from the “Yes” lobby, a scare story like the 12-mile Exclusive Economic Zone whopper.

    I am in favour of Scotland having greater autonomy but If the deal isn’t good for Shetland I will vote “No” whether or not I am based in Shetland when the referendum time comes.

  • Gordon Harmer

    • April 25th, 2013 17:22

    Stewart you proclaimed the SNP are offering a clear and identifiable option for change with independence. When I went to school clear and identifiable meant. Clear; free from darkness, obscurity, or cloudiness; light transparent, pellucid, without discoloration, defect or blemish. Identifiable; to recognise or establish as being a particular thing.

    No one can claim that the SNP’s fanciful notion which is independence for Scotland is any of the above. Independence encases policies, it is made up of policies, and it’s very political being is about policies. You can’t have independence without policies, unless of course you are the SNP. Anyone who votes yes for the SNP’s policy less version of independence is committing political and national suicide.

    Stewart there is an option for Shetland which has been put forward by some pragmatic forward thinkers including our MP and MSP and some of the SIC. This is using our right to self determination and take a road that will give us a far bigger say in our own future. Self determination is a far more realistic version of change than anything the SNP or their breakaway bedfellows have come up with. If you want something that is clear and identifiable, and possible, you don’t have to look to the other political parties to find it. Shetland having more autonomy over what happens here is the answer.

  • Martyn Fisher

    • April 25th, 2013 19:21

    A we bit upset with people twisting my words. Not helpfull. Seems to be very different camps. Yes or No .. I like the debate.. I think most of us us are set in our ways.. So lets stop this negative thing that seems to be going on. You will not convince me to vote anything else but FREEDOM.. The people who both sides need to convince is the people who have no made up minds yet… So enough of the mud slinging ….

  • David Spence

    • April 26th, 2013 12:33

    Correct me if I am wrong, but if the people of Scotland vote ‘ YES ‘ for independence, does the act of being and becoming independent from the rest of the UK, still have to go through Westminster and ‘ the english ‘ Parliament (not wishing to appear to be xenophobic lol) before such an act is given? (in other words, independence is controlled and granted by the Houses of Parliament).

    As well as this, I believe (if independence is granted by Westminster) the SNP will still be using ‘ the english currency ‘ (and the implications of Scotland joining Europe or the ability to change its currency to the Euro still being controlled by sterling?????) as its own and still recognizing the Queen as the Head of State………so, on that basis, will we really be independent lol?

  • Ali Inkster

    • April 26th, 2013 19:58

    Surely the celtic tiger was a myth for the simple reason that it was based on money being pumped into Ireland by Europe, when this source of “revenue” dried up the boom was very quickly over. Maybe Wee Eck wishes to be in a position to receive countless millions from the EU and the inevitable corruption that comes with free cash and no checks on how it is spent.


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