On the money

True when he said it and still true. Scotland is the rest of the UK's second largest export market. Exports from the rest of the UK to Scotland are greater than those to Brazil, South Africa, Russia, India, China and Japan put together with £60,000,000,000 worth of goods and services being sold to us each year. If there was no currency union, the businesses earning that money from us would face additional transaction costs estimated at £500,000,000, threatening tens of thousands of jobs in the rest of the UK. Are we really to believe that any UK politician would ignore the justified howls as English companies closed and cut back because of a spiteful, pointless refusal to pursue a currency solution that is in fact in the best interests of both countries? Without our exports, the UK's balance of payments will plummet (oil receipts halve the UK's balance of payments deficit). If we have our own currency, the UK would have as a neighbour a major trading partner which could devalue overnight, rendering its exports to the UK instantly more competitive than domestic products. In whose interests is that?

It's of course not at all surprising that the UK parties will say, now, as part of the campaign, that they would not agree to a currency union but if there's a yes vote, they'll simply do something different. Even if you think we can't know that to be true, it's surely a reasonable possibility to explore. Jeremy Paxman and the rest are usually pretty quick to express at least some doubt when a politician claims something. Will the BBC press Osborne and Balls on the credibility of the claim (assuming they end up making it): what will they tell their constituents when the factories start to close? In what way is it in the interests of those consitutents to harm the economic well-being of their second biggest export market? It's patent bluff.

But, just in case, here's a fallback. Scottish pound, pegged 1:1 to sterling seems the most minimally disruptive solution and would in fact leave us with all the sovereignty that Better Together were so worried about "ceding". And, if this is how the negotiations go, no need to agree to contribute anything to service the UK's debt. Not agreeing to pay to the UK something to help it meet the cost of its borrowing is not the same as defaulting on a debt to a third party. And that is most particularly true if the decision not to pay is made in response to the kind of spiteful, unreasonable bullying that is threatened and as part of the swings and roundabouts of overall negotiation.

And with no debt interest and no Trident to pay for, Scotland becomes one of the only two or three countries in the developed world with no deficit. If you don't have a deficit, the need to borrow anything at all is pretty much diminished.