Would Scotland be forced to join the euro?

Osborne uses the most devastating weapon in the No campaign's arsenal.

The logic of George Osborne leading the charge against Alex Salmond is slowly revealing itself. The government's trump card is that an independent Scotland could be forced to join the euro, and the Chancellor is the man to play it. He told ITV News last night: "Alex Salmond has said he'd want Scotland to join the euro and you have to ask yourself is that the currency you want to be joining at the moment."

In fact, Salmond's stance on the euro is considerably more nuanced than Osborne suggests. True, in 2009, the First Minister quipped that sterling was "sinking like a stone" and argued that euro membership was becoming increasingly attractive ("the parlous state of the UK economy has caused many people in the business community and elsewhere to view membership favourably"). But that, to put it mildly, is no longer the case and, consequently, Salmond has changed tact. Like Gordon Brown circa 2003, he now states that Scotland will retain the pound until it is in the country's "economic interests" to join the euro.

But last night Osborne refused to guarantee that Scotland could keep sterling. In truth, this was a bit of mischievous politicking by the Chancellor (no one believes that the UK would stop Scotland using the pound) but the Treasury has warned that it could ban Scotland from printing Scottish bank notes (just as the eurozone requires all members to use identical bank notes) and ensure that it has no say over valuation decisions, a situation comparable to Kosovo's membership of the euro.

The SNP has since come out fighting, declaring that "the more a Tory chancellor tries to lay down the law to Scotland, the stronger support for independence will become" but this is uncomfortable territory for the party. A spokesman for John Swinney, the Scottish finance secretary, insisted that the currency situation was "crystal clear" but in reality it is several shades of grey.

EU law currently requires all new member states to join the euro area once the necessary conditions are fulfilled. As a briefing note by the House of Commons library states:

EU Member States, with the exception of Denmark and the UK, are expected to join the single currency if and when they meet the criteria. Five of the twelve states joining the EU since 2004 have gone on to join the euro. Whether Scotland joined the euro would have implications for its post-independence monetary policy, and the size of its liability for loans provided to countries facing sovereign debt problems.

Whether or not Scotland kept the UK's derogation from the euro would be dependent on the will of other EU member states. There is no precedent for a devolved part of an EU country becoming independent. For once, we really would be in uncharted territory.

Thus, there is sufficient legal uncertainty for Osborne to speculate that Scotland could be forced to join the euro. And that is the most devastating weapon in the No campaign's arsenal.

Update: I should have added that Sweden, of course, has no official opt-out from the euro but has not joined the single currency after voting no in the 2003 referendum. The country is not party to the ERM II Central Bank Agreement (part of the criteria for euro membership) giving it a de facto opt-out.

Should this precedent apply to an independent Scotland, it would similarly not be forced to join. But this is hardly the cast-iron guarantee that many Scottish voters will want.

George Eaton is political editor of the New Statesman.

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Shadow Scottish secretary Lesley Laird: “Another week would have won us more seats”

The Labour MP for Kirkcaldy and Cowdenbeath on the shadow cabinet – and campaigning with Gordon Brown in his old constituency.

On the night of 8 June 2017, Lesley Laird, a councillor from Fife and the Labour candidate for Kirkcaldy and Cowdenbeath, received a series of texts from another activist about the count. Then he told her: “You’d better get here quick.”

It was wise advice. Not only did Laird oust the Scottish National Party incumbent, but six days later she was in the shadow cabinet, as shadow Scottish secretary. 

“It is not just about what I’d like to do,” Laird says of her newfound clout when I meet her in Portcullis House, Westminster. “We have got a team of great people down here and it is really important we make use of all the talent.

“Clearly my role will be facing David Mundell across the dispatch box but it is also to be an alternative voice for Scotland.”

At the start of the general election campaign, the chatter was whether Ian Murray, Labour’s sole surviving MP from 2015, would keep his seat. In the end, though, Labour shocked its own activists by winning seven seats in Scotland (Murray kept his seat but did not return to the shadow cabinet, which he quit in June 2016.)

A self-described optimist, Laird is calm, and speaks with a slight smile.

She was born in Greenock, a town on the west coast, in November 1958. Her father was a full-time trade union official, and her childhood was infused with political activity.

“I used to go to May Day parades,” she remembers. “I graduated to leafleting and door knocking, and helping out in the local Labour party office.”

At around the age of seven, she went on a trip to London, and was photographed outside No 10 Downing Street “in the days when you could get your picture outside the front door”.

Then life took over. Laird married and moved away. Her husband was made redundant. She found work in the personnel departments of start-ups that were springing up in Scotland during the 1980s, collectively termed “Silicon Glen”. The work was unstable, with frequent redundancies and new jobs opening, as one business went bust and another one began. 

Laird herself was made redundant three times. With her union background, she realised workers were getting a bad deal, and on one occasion led a campaign for a cash settlement. “We basically played hardball,” she says.

Today, she believes a jobs market which includes zero-hours contracts is “fundamentally flawed”. She bemoans the disappearance of the manufacturing sector: “My son is 21 and I can see how limited it is for young people.”

After semiconductors, Laird’s next industry was financial services, where she rose to become the senior manager for talent for RBS. It was then that Labour came knocking again. “I got fed up moaning about politics and I decided to do something about it,” she says.

She applied for Labour’s national talent programme, and in 2012 stood and won a seat on Fife Council. By 2014, she was deputy leader. In 2016, she made a bid to be an MSP – in a leaked email at the time she urged Labour to prioritise “rebuilding our credibility”. 

This time round, because of the local elections, Laird had already been campaigning since January – and her selection as a candidate meant an extended slog. Help was at hand, however, in the shape of Gordon Brown, who stood down as the MP for Kirkcaldy and Cowdenbeath in 2015.

“If you ever go out with Gordon, the doors open and people take him into their living room,” says Laird. Despite the former prime minister’s dour stereotype, he is a figure of affection in his old constituency. “People are just in awe. They take his picture in the house.”

She believes the mood changed during the campaign: “I do genuinely believe if the election had run another week we would have had more seats."

So what worked for Labour this time? Laird believes former Labour supporters who voted SNP in 2015 have come back “because they felt the policies articulated in the manifesto resonated with Labour’s core values”. What about the Corbyn youth surge? “It comes back to the positivity of the message.”

And what about her own values? Laird’s father died just before Christmas, aged 91, but she believes he would have been proud to see her as a Labour MP. “He and I are probably very similar politically,” she says.

“My dad was also a great pragmatist, although he was definitely on the left. He was a pragmatist first and foremost.” The same could be said of his daughter, the former RBS manager now sitting in Jeremy Corbyn's shadow cabinet.

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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