Tuesday, February 11, 2014

The currency of fear-mongering (about currency)

Another week, another misinterpretation of the Bank of England Governor. This time, from the boss of Orion Group(not to be confused with the Korean Orion Corporation), Mr Alan Savage speaks out in a letter to the Huffington post, siding firmly with the Better together campaign. Naturally, the very same talking point is raised yet again, that of currency.


"But for me the biggest uncertainty of all in Mr Salmond's separation experiment is on the vitally important issue of currency. I have no confidence at all that an independent Scotland would be able to retain the pound. Running my specialist engineering recruitment business - or any company - from Scotland without stable currency arrangements is a non-starter.
Don't take my word for it on the issue of the pound, listen to the Governor of the Bank of England who has told the SNP that an independent Scotland would have to establish a central taxation body, the very thing that Salmond doesn't want. This unknown over what currency an independent Scotland would have is creating untold uncertainty and harming business confidence when we should be concentrating on recovering from recession."

This, unfortunately, is what happens when folks take Alistair Darling's version of the Governors speech at face value and don't question that much of what Mr Darling said was completely unsubstantiated. Of course,  its not the first time Mr Savage has said more or less the same thing.


Now..returning to the topic at hand...

 I sincerely doubt anyone will take your word for it, Mr Savage. The Governor made no mention of a requirement for a central taxation body for the currency union. Read the speech. Its freely available on the BBC.  The Governor did use the Euro as a warning of what goes wrong with a shared currency without fiscal checks, however contrary to Mr Savage's interpretation, there was no mention of the centralization of taxes. Actually, the only time he mentioned tax revenues was when he mentioned that tax revenues fall when output falls, and the benefit of a union like the UK is that resources can then be transferred to the underperforming province as life support. It helps, but is not a requirement. By the way, Its called a Transfer Union. Mr Savage may want to remember that the next time he writes online. You'll notice if you exchange 'central taxation body' to 'Transfer Union', his blog post doesn't quite have the fear-mongering kick. Some bias is removed and it sounds a tad less like an opinionated rant. Don't worry, Mr Savage,  consider that advice free of charge.

Now, to get away from that tangent, the governor mentioned a selection of options that are available for a prospective currency union. A Transfer Union was merely one of a selection of choices available.

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