By Alasdair Galloway
The second part of McDougall’s misrepresentation concerns whether in this interview on Radio 4, Joh Swinney admits confirming that Nicola Sturgeon’s plan for a decade of Sterlingisation (using the Pound without a central bank and control of the currency) meant that Scotland wouldn’t be able to use quantitative easing (the creation of money by our central bank, the Bank of England) – ie the proposal by Andrew Wilson’s Growth Commission report which was hardly enthusiastically received by all sections of the independence movement, and which Wilson himself has admitted is now largely moot owing to the passage of time and events since its publication. https://video.twimg.com/ext_tw_video/1437355174767611916/pu/vid/270×270/nkYhU0O8TOl4Ddfw.mp4?tag=12
Swinney in fact says nothing of the kind, though I don’t think he deals with the question particularly well. In fact, there are almost two parallel discussions developing. The interviewer is saying that in the event of independence we would not be able to rely on the Bank of England, which would be difficult or impossible to deny. Indeed, it’s probably not desirable to deny it. Swinney in response points out that as an independent country, with full powers, we could borrow, take macroeconomic decisions in our interests (in fact this is where the interview is cut off – Swinney might have offered even more responses to a serious economic downturn).
McDougall argues “we would have faced disaster without the ability to ‘print money’ in this way (QE). It is because we have a central bank and control over our currency that we have been able to borrow to fund the NHS in the pandemic, to pay for covid vaccines, to pay the wages of Scots through the furlough scheme.”
Almost every clause there makes an assumption which is just wrong. He asserts
- we would have no central bank – if we have our own currency a central bank is not an optional addon but a necessity.
- we would not have control over our own currency. Why would we not have control when it’s our currency.
- why would we not be able to borrow to fund the NHS etc, in the event of another pandemic? Reverting to Mark Blyth again, asked this very question he replied
- On the question of, ‘Could you do this?’ [i.e. fund a lockdown] he replied, “Of course you could. [Scotland] is a dynamic, innovative, small, well-governed country.”
- Perhaps Blair would like to tell us why the EU has suspended the Fiscal Compact that puts limits on the borrowing capacity of member states which use the Euro? How have other countries in Europe managed this without, to the best of my knowledge, dire economic consequences?
But as he goes on, McDougall really outdoes himself. He suggests, “Arguing that we wouldn’t have access to quantitative easing but that we would borrow shows either that he [Swinney] doesn’t understand the policy or, more likely, that he hopes we don’t.” But Swinney hasn’t said this. Swinney instead goes off on the argument about needing more powers without being specific about which ones would be used. McDougall is actually having a conversation with the interviewer.
Then, McDougall really does blow his foot off when he writes “Quantitative easing is being used so that government can borrow the huge amount needed in this crisis, not as an alternative to borrowing.”
Just why would an independent Scotland not be able to do the same thing? The only evidence that we couldn’t do as Westminster has done, contacting the central bank to send a few billion more readies in return for debt instruments. McDougall is right – this is what Westminster has done – it has borrowed from the Bank of England and will in due course have to make interest payments (at very good rates admittedly) and then in due course repay. Guess who owns the Bank of England? In other words, the UK government has borrowed from its own bank to which it will make repayments which in due course will probably be returned to the Treasury. And let’s be clear, this has been going on since 2008 when the banks blew up the economy. If someone from the Scottish Government even hinted at this sort of monetary management the outrage would be wonderous.
In fact, quantitative easing takes place all over Europe. Just last month the ECB wrote the following – “Asset purchases, also known as quantitative easing or QE, are one of the tools that we at the ECB use to support economic growth across the euro area and bring inflation to our 2% target.”.
If I was going to be critical of Swinney it would be on the grounds that he is a bit too mealy-mouthed about setting up our own currency. We may not do this on day one, but ten years is out of the question.
You will almost certainly be relieved to know that parts 3 and 4 need not detain us for long.
Part three is called “The Greens are the SNP’s Plan B”. interestingly in this section McDougall writes “It could not be more obvious what she [Nicola Sturgeon] wants if she held up a ‘second vote Greens’ sign while speaking.” This is Unionism’s worst nightmare. For two Holyrood elections now, literally thousands of SNP List votes have had no impact at all, because the SNP are cleaning up the constituencies. The more constituencies you win, the fewer List seats you take, all other things equal. Thus, if Sturgeon could persuade 50% of the last SNP List vote to vote Green, there would be just over half a million more list votes for the Green Party on the List. This would mean no more SNP MSPs (but no fewer) but 17 more Green MSPs and 87 independence supporting MSPs at Holyrood (assuming that the SNP don’t finally find a way to get rid of Jackie Baillie). Expect more of this.
Part 4 is called “They’re desperate for a fight but most of us still want a quiet life.”, which basically is arguing that the Scottish electorate really don’t want a referendum, or indeed independence.
With regard to the former he asserts the utterly illogical “The biggest barrier to leaving the UK isn’t the UK government but the Scottish people themselves”, when the Scottish electorate wont be able to give an opinion until or unless the UK government allows this!
To buttress this, he claims of the last 20 polls, only 2 backed independence (btw, in Unionist circles this is now to be known as “Scexit” – you know “Brexit” for Scotland).. This isn’t actually true. Of the 20 polls ending with the one on 18 September by Sevanta and going back to 22nd April (Survation) while independence did indeed only come out on top twice, four were tied. The Unionist lead varied between 9% and 1%. I don’t suppose Mr McDougall would want to be reminded that between June last year and the beginning of January this year, independence was the preferred option for the majority of respondents for no fewer than 17 polls, the lead varying between 11% and 1%.
In other words opinion varies. But the most threatening thing for the Unionist cause is that the independence option since 9/14 has never been less than 35% and is usually in a range between middle 40s and 50+. This contrasts greatly with the 28% independence started on 2012.
McDougall concludes that “only the core nationalist vote want another referendum on Nicola Sturgeon’s timetable”. What Blair forgets is that the SNP vote at the last Holyrood election was 47.7% and 45% in December 2019. Both of these seem to me a good place to start!