Alex Salmond addresses a Business for Scotland event earlier today in Aberdeen. Photograph: Getty Images.
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Salmond didn't even come close to rebutting Osborne's currency threat

The Scottish First Minister offered no persuasive argument for Scotland entering a currency union with the rest of the UK.

If Alex Salmond's speech today was intended to be a "deconstruction" of Westminster's warning (delivered by the triumvirate of George Osborne, Ed Balls and Danny Alexander) that the UK would not form a currency union with an independent Scotland, it didn't go to plan. His opening gambit was to suggest, as Nicola Sturgeon did last week, that Osborne and others are simply bluffing. After a vote in favour of independence, "enlightened self-interest" would lead the Treasury to agree to share the pound. But all of the public - and private - statements by the unionist side suggest that this is no bluff: they really are not prepared to risk the health of the UK economy by placing it in an unstable currency union with a country with a decidedly poor fiscal outlook and a banking sector 12 times its GDP. 

In a tacit admission of as much, Salmond went on to make two other main arguments against denying Scotland the pound. The first was that it would impose transaction costs of around £500m per year (dubbed "the George tax" by Salmond) on UK businesses: "I am publishing today an estimate of the transactions cost he would potentially impose on businesses in the rest of the UK. They run to many hundreds of millions of pounds. My submission is that this charge – let us call it the George tax – would be impossible to sell to English business."

The problem with this argument is that it simply isn't true. The figure of £500m (less than 0.0005 per cent of the UK's GDP) is too small for it to outweigh the negative costs of a currency union between England and Scotland. But in any case, as Alistair Darling noted after the speech, Salmond's championing of the pound merely reinforces the case for the status quo. He said: "Alex Salmond was arguing against about a problem of his own making - the problem of transaction costs for business due to changing currency. Avoiding extra costs to business and not placing jobs at risk are powerful reasons why we should vote to remain in the UK and keep the pound."

As a last resort, Salmond again brandished the threat to default on Scotland's share of the UK's national debt if the government vetoes a currency union. "If there is no legal basis for Scotland having a share of the public asset of the Bank of England then there is equally no legal basis for Scotland accepting a share of the public liability of the national debt," he claimed. But any default would, as he surely knows, would render Scotland an economic pariah, destroying its creditworthiness at a single stroke and preventing it from raising the funds it needs on the international money markets. 

With arguments as weak as these, Salmond was forced to fall back on essentially political points: Westminster is bullying Scotland and Labour is dancing to the Tories' tunes. "The sight of the Labour Shadow Chancellor reading from a script prepared by George Osborne" was, he declared, "too much to bear for many Labour supporters in Scotland". With no opinion polls published since Osborne delivered his threat, it is impossible to know whether he is right about the mood of this crucial swing group. But today, Panglossian as ever, he unambiguously failed on his own terms. 

George Eaton is political editor of the New Statesman.

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Tom Watson rouses Labour's conference as he comes out fighting

The party's deputy leader exhilarated delegates with his paean to the Blair and Brown years. 

Tom Watson is down but not out. After Jeremy Corbyn's second landslide victory, and weeks of threats against his position, Labour's deputy leader could have played it safe. Instead, he came out fighting. 

With Corbyn seated directly behind him, he declared: "I don't know why we've been focusing on what was wrong with the Blair and Brown governments for the last six years. But trashing our record is not the way to enhance our brand. We won't win elections like that! And we need to win elections!" As Watson won a standing ovation from the hall and the platform, the Labour leader remained motionless. When a heckler interjected, Watson riposted: "Jeremy, I don't think she got the unity memo." Labour delegates, many of whom hail from the pre-Corbyn era, lapped it up.

Though he warned against another challenge to the leader ("we can't afford to keep doing this"), he offered a starkly different account of the party's past and its future. He reaffirmed Labour's commitment to Nato ("a socialist construct"), with Corbyn left isolated as the platform applauded. The only reference to the leader came when Watson recalled his recent PMQs victory over grammar schools. There were dissenting voices (Watson was heckled as he praised Sadiq Khan for winning an election: "Just like Jeremy Corbyn!"). But one would never have guessed that this was the party which had just re-elected Corbyn. 

There was much more to Watson's speech than this: a fine comic riff on "Saturday's result" (Ed Balls on Strictly), a spirited attack on Theresa May's "ducking and diving; humming and hahing" and a cerebral account of the automation revolution. But it was his paean to Labour history that roused the conference as no other speaker has. 

The party's deputy channelled the spirit of both Hugh Gaitskell ("fight, and fight, and fight again to save the party we love") and his mentor Gordon Brown (emulating his trademark rollcall of New Labour achivements). With his voice cracking, Watson recalled when "from the sunny uplands of increasing prosperity social democratic government started to feel normal to the people of Britain". For Labour, a party that has never been further from power in recent decades, that truly was another age. But for a brief moment, Watson's tubthumper allowed Corbyn's vanquished opponents to relive it. 

George Eaton is political editor of the New Statesman.