UK News

Sturgeon’s exchange plans torn apart by a man who helped break up Czechoslovakia | UK | New UK News

Scottish Prime Minister Nicola Sturgeon has said a second independence referendum was the ‘will of the country’, after the Scottish National Party (SNP) won a fourth consecutive term in power earlier this month. The SNP and the Scottish Greens won a total of 72 seats in Holyrood on a record turnout in the Scottish Parliament elections of 63% – 10% above the average for this level of voting. In the last legislature, the Greens and the SNP formed a pro-independence majority, with the former supporting the minority government on key votes, including the budget.

It is now possible that they will form a coalition government in this parliament, which could increase pressure on the UK government to accept a second referendum.

After the vote, however, Prime Minister Boris Johnson said the focus should be on resuming Covid and not another referendum on independence, which led to unanswered questions about what the SNP will then do.

In the event of a second referendum, separatists will detail the loss of the budget transfer now worth at least £ 10bn, Scotland’s separation from a UK single market worth nearly 30% of its GDP, and above all, the financial chaos which promises to be unleashed by the SNP’s exchange rate plan.

The Nationalists’ monetary plan for independence is to continue using the pound until economic conditions permit a switch to a new Scottish currency.

Former President of the Czech Republic, Vaclav Klaus, who helped break up Czechoslovakia, however, advised against even a temporary monetary union.

Asked about the prospect of Scottish independence during an event in the House of Commons in 2014, the former president said it was possible to dismantle a country “in a gentle and friendly manner”, but stressed that Slovakia and the Czech Republic had failed to maintain monetary union.

After the countries separated in 1993, it took only 38 days to separate the currencies, even though the union was supposed to last at least six months, when the smaller country, Slovakia, was forced to devalue. .

Mr Klaus, who is also an economist, said: “We were afraid of the loss of our economic relationship. So we decided to keep the customs union, we decided to keep the free trade area and we wanted to keep the monetary union.

“I always maintain that I am an expert in dismantling currency unions. We wanted to keep the Czechoslovakian (Koruna) for the future, but after six, seven weeks we realized that was really impossible.

He added: “No one believes me in Europe but separating the two currencies was a simple administrative thing to do. The separation of currency was a non-event. People don’t remember the next day. Nothing happened.”

He also said that during his time overseeing the separation of countries, he wanted to “make the split as smooth and friendly as possible, which we did”.

He insisted, “We called our divorce a velvet divorce. It is better to have a velvet divorce than to live together in an unfriendly way.

Mr Klaus made his comments at an event in Westminster, where he was launching the English translation of his Eurosceptic book “Europe: Shattering the Illusions”.

In an exclusive interview with, Ronald MacDonald, a research professor in macroeconomics and international finance at the Adam Smith Business School at the University of Glasgow, also cast a shadow over Ms Sturgeon’s currency plans.

He explained: “Their strategy for an independent Scotland is to have a relatively long transition period during which they continue to use the pound sterling.

“Borrowing in a foreign currency is a very dangerous strategy, especially if you are borrowing the kind of money they are talking about.

“The reason is that if you go to sterlingization, it’s a strictly fixed form of exchange rate.

“The UK has a flexible exchange rate. This means that when you take a shock to the economy, you have ways to adjust the economy to it.

“By adopting the currency of another country, you are really fixing your currency against that currency. And you have no way of adjusting.

“It is not tenable for an independent country.

“I separately argued that this could lead to bankruptcy.

“They haven’t thought about the macroeconomic framework.”

He concluded: “It is a very complex mixture and unfortunately this complex mixture was not explained to the electorate.

“This is my concern.

“I hope that if there is another referendum campaign, people will start making these arguments to them.”

More about this article: Read More
This notice was published: 2021-05-19 13:02:46