15. What about my wages?
This depends on your employer. If you work for the Scottish Government, Scottish Health Service, a Council or any other public sector body then from the first month your wages will be paid in S£. You will not have a choice about that. The amount you get paid will be exactly the same as before. If you work for somebody else then it is up to you and your employer to agree whether they continue to pay you in Sterling or switch to S£. Most employers are likely to switch to the S£ within a month or two, simply because using Sterling will become inconvenient.
So the FX rate goes into freefall as the S£ is run on MMT lines. Those being paid £ see their wages rise, massively, against S£. That’ll be fun, won’t it?
What about those people in Scotland who work for the British government? Presumably they’ll either emigrate to England when their jobs do, or they’ll potentially stay in Scotland if their jobs get nationalised.
How about people with pensions? Presumably pensions from firms and pension schemes registered in England will be paid in sterling. What about people living in England with pensions from firms and pension schemes registered in Scotland? They’ll be paid in S£ presumably. Will everybody who has a private pension with Standard Life and so on transfer it to an English company?
And now the biggies: what about the State Retirement Pension? What about the pensions of government employees? Presumably your LGPS pensions will be paid in the currency of the LGs you worked for. But what about NHS pensions, Teachers’ Pensions, Civil Service Pensions, Armed Forces pensions? You could have worked in the NHS in all four home countries – which will provide your pension?
Should LG workers in Scotland hurry to get LG jobs in England and transfer their pension rights to the schemes of their new employers? Should English LG schemes start to refuse to accept the transfer of rights from Scotland?
The State is a much bigger part of everyone’s life than it was in the 1920s: disentangling entitlements is going to be infinitely more complex than it was when the Irish Free State departed. (Famously, the Irish desire for independence didn’t prevent the Free State eventually asking for a British subsidy and getting it.)
So resign my job and move south before they change the currency.
I will plan to do so.
Like Afghanistan, the immediate shriek will be for more and more and more foreign aid.
dearieme said:
“How about people with pensions? Presumably pensions from firms and pension schemes registered in England will be paid in sterling.”
As an extra complication, what if the employer firm was in England but the pension provider in Scotland? And does it make a difference whether it was defined benefit or defined contribution? And whether you retire before or after independence?
What about multi-employer pension schemes such as USS (the Universities Superannuation Scheme)? Isn’t there also a multi-employer scheme for the construction trades? Maybe there are others. How is it going to work out for them?
I suppose the Mineworkers’ Pension scheme could save a few bob by paying pensions in S£ to anyone with a Scottish address. That would have many people gurgling with delight. Though not the recipients, obvs.
If your address is going to matter, when is it going to matter? I mean, will they use your address on Independence Day to decide whether to pay you in sterling or not? That’ll lead to substantial emigration southwards, eh? Or will they use your address on the day you started to receive your pension, thus leading to a lot of temporary flits south. Or your address on Referendum day?
I dare say Carlisle and Berwick-upon-Tweed should expect high rates of population growth.
That’s a strange way to spell €.
Seriously though, why bother with the intermediate step of using a Scottish pound? Just use the Euro without explicit approval (dollarization), force the budget to be balanced, kitchen-sink the pain, and move forward into the glorious independent future with a slimmed-down government.
Onwards to the rain-soaked uplands, Comrades!
“Seriously though, why bother with the intermediate step of using a Scottish pound? Just use the Euro…”
Because that would be the honest thing to do?
I once wrote a serious paper on Scottish Independence and Telecommunications.
It was supposed to be a set of detailed steps, but it was impossible to treat it so, impossibilities and contradictions overwhelmed me before breakfast.
The only sensible conclusion was: don’t try and maintain a telcoms business in Scotland, walk away, it’s their problem.
Fortunately, my sponsor wasn’t OFCOM, who cannot do so.
Although it’s easy to laugh, it will be the ruin of millions. Traitors really do need the Heads on Pikes treatment: the evil unleashed will be dreadful.
@dearieme: you know the answer to all those questions is ‘The English taxpayer (or pension fund) will pay for it’.
Andrew M – Getting Scotland into the Euro would require them to comply with the accessibility rules. There is a big deficit flavoured shit stain in the way. Scotland can have independence or socialism – but not both.
Is this an elaborate troll?
EXHIBIT A. Take this guy:
Tim Rideout
@RideoutTim
Economist, Geographer & Cartographer, co-founder of XYZ Maps, Convener of the Scottish Currency Group, Lothians Member of the SNP Policy Development Committee.
Is this a real person or a Godfrey Elfwick type spoof? Are there even cartographers in 2021? I’m pretty sure everything has already been discovered.
EXHIBIT B: they’ve produced photoshops of fake Scottish money featuring unicorns, lol
https://lirp.cdn-website.com/8274bfd1/dms3rep/multi/opt/TIMETABLE-640w.jpg
@ dearieme
Standard Life has stated that it will redomicile to England if Scotland declares “Independence”.
There is (or certainly was when I was young) a multi-employer scheme for trawlermen covering both Scots and other British trawlermen.
How do we even know “Scotland” even exists and isn’t a bunch of bored Geordies taking the piss, hinny?
This could just be a Russ Abbott sketch that got out of hand.
‘Euroising’ would be the honest way to go, but how would it work? Banks could purchase euros, but who is the lender of last resort? And how would the government fund their spending? Presumably by borrowing in euros.
Anyone know how dollarisation works in Latin America?
Chris M,
I googled it once when I was interested myself, I can’t remember it now but it was easy to find out. Incidentally Cambodia uses dollars and it’s own currency in parallel and you can draw either From ATMs. No idea how that works.
Cambodia uses dollars and it’s own currency in parallel and you can draw either From ATMs. No idea how that works.
It must be a very big ATM to hold all the paper. The current midmarket rate is US$1=Riel4,073.
When I first went to Cambodia in 1993 there was a currency exchange van just outside the airport arrival hall. Then the rate was marginally better. In my ignorance I tried to change a US$100 note. The charming girls in the van just laughed and said, “you dont need that much, $10 is enough”. (As an aside, local weed then was US$5 a kilo)
“Seriously though, why bother with the intermediate step of using a Scottish pound?”
Because they know that the Euro gives the lie to their claims of independence. Not just on a high-falutin’ fiscal/economic level, either. People might start asking questions about why they had Bank of Scotland, Royal Bank, and Clydesdale Bank notes in their wallets under the English oppressor, but only have ECB notes with a picture of Edinburgh Castle on the back under “independence”.
The currency problem scares the Nats witless. They’d like to hand everything over to Frankfurt like good little Europeans, but know exactly how that looks.
“Standard Life has stated that it will redomicile to England if Scotland declares ‘Independence’.”
I was told on good authority back in the summer of 2014 that (although it didn’t want to publicise it for fear of a nationalist backlash) it had decided to freeze any new investment in Scotland regardless of the outcome of the referendum, and would reconsider in 2024. And that it wasn’t alone.
Anyone know how dollarisation works in Latin America?
I don’t know how it work in Latin America but in HK the central bank keeps (kept?) enough dollars in reserve to cover all the HK dollars in circulation.
Getting Scotland into the Euro would require them to comply with the accessibility rules. There is a big deficit flavoured shit stain in the way. Scotland can have independence or socialism – but not both.
At the moment all those accessibility rules appear to be suspended with little talk of them be applied again as the ECB has been buying all the bonds being issued by Eurozone governments. Some of the sensible Germans I follow on Twitter are saying they might as well ditch their “debt brake” because they’re going to be shouldering the responsibility for most of the other countries’ looming financial problems.
This could just be a Russ Abbott sketch that got out of hand
Genuinely made me LOL that! If only!
China and/or Russia would prop up an independent Sco’land financially…perhaps in return for a military base.
Anyone know how dollarisation works in Latin America?
It works very well, mainly because the gov’t has little to do with it. You can hold doller and sol accounts at any bank, all ATMs hold both currencies (near the Brazilian border they hold reais as well) and generally pay for things in either currency, though sensible people have their savings in US$, which is after all the world currency.
Thanks for the explanation, BiCallao. I guess if you work for the govt you get paid in Sols. But that only works if your currency is reasonably stable, otherwise govt employees get a pay cut every month (not, perhaps, a bad idea).
IIRC Denmark for many years pegged the DKK to the DM, and latterly to the euro, which seems to work. I wondered idly if you can get away with this only if you’re a small country, I don’t suppose there’s much speculation in the DKK rate.
@BiND
I don’t know how it work in Latin America but in HK the central bank keeps (kept?) enough dollars in reserve to cover all the HK dollars in circulation.
An excellent plan. Hard to see it working in Jockistan, though.