September 12, 2014
The International Monetary Fund (IMF) has decided to sing along with the chorus of banks threatening doom and gloom if Scotland were to choose independence from the UK. William Murray, a deputy spokesman for the IMF said “a yes vote would raise a number of important and complicated issues that would have to be negotiated”. Indeed it would, as the banks would have to come to terms with a nation, now independent, with one of the richest reserves of national resources at their disposal.
Murray ominously added: “the main immediate effect is likely to be uncertainty over the transition to potentially new and different monetary, financial, and fiscal frameworks in Scotland”. Again: yes it would. But not in the way the international banking organization portrays the “uncertainty” of a possible Yes-outcome.
The announcement by the IMF follows in the wake of recent statements issued by the Royal Bank of Scotland and Lloyds Banking Group, threatening to move their headquarters to London if the vote turns to independence. But, as Forbes contributor Tim Worstall points out in a recent op-ed, such a withdrawal would actually be a good thing:
“This is generally being taken as being bad news for the independence movement. But it’s not, not really. While the head office might move that is pretty much all that will move: with one rather large exception. There will still be the same number of people working in the banks in Scotland, more or less (my own mortgage is handled by some very nice Scots people at Lloyds) and so the effect in that sense on the Scottish economy will be minimal. What does move to London along with the board and the CEO is that potential liability of 1,200 % of GDP. And that of course is a good thing for the independence argument.”
So the intended threat by the semi-governmental banks is actually not a threat but an encouragement for the Scots to go ahead and declare themselves independent from Westminster. Worstall argues that the fractional reserve system, with all its inherent debt now encompassing the entire UK, would no longer apply to an independent Scotland. In addition, the Pound Sterling would in the case of independence continue to be the currency with which Scotland would go about doing business. Even in the event of a bankrun as a result of the threats uttered by banking heavyweights RBS and Lloyds, Worstall argues the problem will ultimately be a problem for England:
“(…) the potential liability will be upon London not Edinburgh (…). These announcements solve one of the major economic problems with Scots independence: they’re thus good news for the independence argument, not bad.”
In other words: the Scottish response to the threatening posture by the banks may simply be not to forget to close the door behind them when they leave. Even the IMF-press release doesn’t exclude the possibility of business continuing on after the dust settles on September 19, when the votes are counted. And rightly so. The banks would be better off not antagonizing Scotland too much as their very existence depends on her.
Although the Scots make out only 8.3% of the total UK population, the share of natural resources Scotland is disproportionably high. Scotland has a share of 32% land area, 61% sea area and a staggering 90% of surface fresh water in the entire UK. Furthermore 65% of the North Sea natural gas production takes place in Scotland, as well as 96.5% of the North Sea crude oil production. We’re not even going into the monopoly in logging (62%) which Scotland enjoys, or the glorious weight Scotland carries in the overall fishery industry of the UK. These numbers beg the question, who needs whom. As activist Shaun Gillepsie points out, there are very few countries in the world that rival Scotland’s resources per head and in such rich diversity. Scotland’s riches are sharply contrasted by the poor state of affairs when we look at the UK as a whole. Not to rub it in, but Westminster has managed to amass over £1.3 trillion in debt, still growing at nearly £6000 a second. Gillepsie:
“(…) the second lowest-paid economy in the entire developed world, the 3th longest working hours in the EU. The UK has the lowest number of holidays in the EU. The UK has the 8th highest gender inequality pay gap out of the EU’s 28 countries. The UK has the highest likelihood of poverty in disablement in the EU. The UK has the highest rail prices in Europe. The UK has the second highest housing cost in Europe. The UK has the highest fuel poverty rates in Europe. The UK is the 4th highest country of wealth inequality in the entire planet!”.
It doesn’t take a genius to figure out why England is constantly stressing the phrase “better together”, for it is indeed better off with the enormous swath of wealth that is Scotland, which on her part would obviously be better off going on by itself.