This Morning Robert Peston on the Today show (08:10) made a highly political statement on behalf of the Yes campaign in Scotland….and considering the fact that Peston admits that not having a currency union would be ‘the greatest blow to Mr Salmond’s separatist ambitions‘ you have to wonder at the careless, or not so careless choice of phrase.
He told us that the reason RBS and Lloyds might relocate their HQs to England was simply because of the refusal of the Westminster politicians to countenance a currency union.….it all flows from that refusal to countenance that union he told us.
John Swinney, the SNP’s finance minister, in a following interview, immediately leapt upon that claim saying the uncertainty was there because of the Westminster politicians…‘as Robert Peston said’.
But the truth is that the uncertainty is created by the SNP’s refusal to countenance an independent Scotland with its own currency and the SNP’s continual and blinkered claim that upon a yes vote there will be a currency union. The SNP has consistently refused to discuss the currency issue candidly and has no ‘Plan B’ should there be no currency union.
The phrasing of Peston’s claim makes it sound as if the position of the three parties, which he keeps referring to as ‘Westminster’ or ‘London politicians’, all good SNP language, was one of pure intransigence and not based on economic and political realities.
The reality is, as the Governor of the Bank of England has just stated, that it is not possible….as this report from the BBC a mere 9 minutes ago states:
Bank of England governor Mark Carney has told trade unions that currency union in the event of Scottish independence would be “incompatible with sovereignty”.
Mr Carney told the TUC conference that a currency required a centralised bank and shared banking regulations. Common taxation and spending were also needed, he said.
Why would an independent Scotland want to then have its finances under another country’s governance and why would that other country take on the risks of another country’s debt?
The European Union shows why the currency union wouldn’t work. The EU has a currency union but no overriding political and financial union, it is made up of sovereign states all making their own decisions with economies of vastly differing sizes and efficiencies.
Peston himself admits it doesn’t work in his book How Do We Fix This Mess?: The Economic Price of Having it all:
A gamble on the prosperity of an entire continent…devastating consequences for the prosperity of Europe…..wonder what the message is there about currency union without political and full financial union…taxing, spending and borrowing determined centrally?
Here Peston again suggests that their position is one based on mere stubbornness and ill-will…..suggesting they were ‘thrilled’ when they later discovered their intransigent, and apparently ‘hypocritical and inconsistent’, position was actually based on real economics and constitutional politics:
BBC economics editor Robert Peston said that the coalition parties and Labour feared that an independent Scotland in a currency union could “live dangerously beyond its means and borrow on a scale that degraded sterling”.
He added: “There was no way that the Tories, Labour and LibDems could allow full budget-making freedom to Scotland even as part of the UK, because to do so would make their argument against monetary union with an independent Scotland look inconsistent and hypocritical.
“They were therefore thrilled today when the governor of the Bank of England agreed with them that a currency union would be incompatible with Scotland being an independent sovereign state,” he said.
Looking through some of Peston’s articles it is a stance and language he has adopted consistently:
It is this refusal of the political establishment in London to countenance formal monetary union with Scotland which is seen by many to have dealt the greatest blow to Mr Salmond’s separatist ambitions.
If anything, Standard Life may have reinforced the intransigent stance of Labour, the Tories and the Lib Dems against forming a partnership with an independent Scotland on stewardship of money and finance.
…their seemingly implacable opposition to monetary union. Though, for what it’s worth, I do not see any sign of government, civil service, Labour or Bank of England lessening their opposition to currency union by even a scintilla.
It looks like Peston works in a similar fashion to the SNP….having all the facts at their finger tips, knowing and understanding the issues, and yet their final conclusions are at total odds with those facts when they come to sum it all up.
Peston frequently explains the issues and the reasons for not having a currency union and for businesses to flee South…and yet he still portrays the decision not to have a currency union as intransigence, implaccable stubbornness, hypocrisy and inconsistency.
In March Robert Peston told us this: EU law may force RBS and Lloyds to become English
If Scotland were to vote for independence, both Royal Bank of Scotland and Lloyds may be forced to move their registered offices or legal homes to London under European Union law, I have learned.
What matters is that the Treasury – and the cross party troika of George Osborne, Danny Alexander and Ed Balls – have cited these apparently unaffordable potential bail-out costs when explaining why they reject the demand of the Scottish government for a formal monetary union between an autonomous Scotland and the rest of the UK.
They say that it would be to trample on the interests of taxpayers in England, Wales and Northern Ireland to enter into a monetary pact with Scotland, which left these taxpayers implicitly exposed to the risks of rescuing two big banks, when regulators in London would not have been in a position to keep them prudent and healthy.
And it is this refusal of the political establishment in London to countenance formal monetary union with Scotland which is seen by many to have dealt the greatest blow to Mr Salmond’s separatist ambitions.
Here Peston tells us Standard Life would relocate because of the risks of a Scottish economy too heavily reliant on the financial sector and exposed to the consequent risks….he goes on to explain why RBS and Lloyds would leave..because most of their customers in are not in Scotland….
This about Standard Life’s reasons for relocating:
Our initial observation is that the Scottish financial sector is unusually large, with total assets estimated at 12.5x GDP [or more than 12 times Scotland’s annual output].
“We would therefore likely view the financial sector as a significant contingent risk to the state. At the same time, a large part of this activity could be re-domiciled to the UK.”
Or to put it another way, S&P thinks there is a pretty good chance that Lloyds and Royal Bank of Scotland, both of which have their legal homes in Scotland, would also relocate to England.
Why?
In the case of the big banks, it would be even more complicated and potentially nerve-racking for their customers, than for Standard Life’s, if their regulator after independence was a yet-to-be created Scottish financial authority, rather than London’s Prudential Regulation Authority and the Financial Conduct Authority.
How so?
Well, like Standard Life, the vast majority of their millions of UK customers are in England, Wales and Northern Ireland, not Scotland.
Here again he points out that uncertainty is an issue…But it is uncertainty created by the SNP…The UK stance of no currency union is certain…it is the SNP’s ‘intransigent’ refusal to accept reality that creates the uncertainty…..
The point is that lenders to banks, including ordinary depositors, have a choice about where to place their money. And many of them will take the view that there is no point leaving cash in RBS when there is a greater than average degree of uncertainty about that bank’s long term prospects.
It is not that independence would definitely be bad for RBS. It is simply that creditors don’t like uncertainty.
So RBS will knock that uncertainty on the head by turning itself into a rest-of-UK financial institution rather than a Scottish one.
And here he points out that Scotland wouldn’t be able to bail out all the customers of its financial institutions….
Would English savers fear that the Scottish government and state might not have deep enough pockets to underwrite an effective insurance scheme for their savings?
To be clear, in an independent Scotland, English, Welsh and Northern Irish customers would be the equivalent of English customers of the Swedish bank Handelsbanken.
This statement on Handelsbanken UK’s website probably says all you need to know (it says Handelsbanken’s UK customers are protected by the Swedish deposit protection scheme, not the UK’s).
On independence it would be the Scottish government’s responsibility to protect deposits of foreign investors and depositors….and they haven’t got the deep pockets, or a big enough sporran, to do that.
So ‘all the facts’ point to currency union being a non-starter for good economic and constitutional reasons….why then does Peston insist on wording that makes it seem that currency union is possible if only it weren’t for the intransigent and unreasonable stance taken by the hated ‘Westminster’?
That’s a very, very political claim to keep making especially days from the referendum vote.
‘‘as Robert Peston said’.
The BBC and its staff can ‘say’ what the heck they like, so long as they are clearly not associated with, or claim to speak for, the nation their name bears. Forced, unique funding of the populace no matter what makes this impossible to separate.
Is this latest incident shows, they are not impartial, can and do try and often succeed in swaying policy.
Even when off trying to survive on their own, I still have a problem with the retention of ‘British’ because what these creeps try to drag me into by association, with others then pointing at their personal claims as symbols of national will, too often is nothing of the sort.
Please can someone clarify for me, does Peston have an economics background?
I know his father was a labour peer and economist (http://en.wikipedia.org/wiki/Robert_Peston) but this isn’t what I mean… has he actually gained any economics qualifications?
If not, how is it that the BBC recruited the best person for the role? Surely there were better qualified people both inside and outside the BBC for this role. He seems, after all, to have glided effortlessly from the Business Editor to the Economics editor at the BBC.
Economics is akin to sociology- anyone can spout bullshit about it and as long as they sound like they know what they are doing they will be believed. Wrong, but believed.
Very few economists come even close to predicting, never mind describing, economics correctly – it’s the old stopped watch analogy again.
Preston is therefore as able as anyone to spout crap about economics.
Mr Peston is unwise here to frame this as a political stand off between Westminster politicians and Scotland. It’s not quite that simple – though that’s certainly the kind of language that Salmond has used.
What he fails to point out is the contradictions in Salmond’s argument for a currency union at all.
1) All new members to the EU must be on a pathway committed to Currency Union.
2) To achieve currency Union a country must have achieved convergence criteria.
3) to achieve convergence criteria, each country must have it’s own central bank and power of money creation.
It is the SNP position that they would be an independent country but inside the EU, subject to the single market rules. This would allow them to continue to trade with England as before (i.e. no import and export tariffs into the Single Market ).
He cannot have it both ways here – is he going to adhere to the accession countries rules and forge ahead with the ‘Groat’, or is he going to stay outside the EU? And what of the other EU countries whose permission will be needed for Scotland to re-enter the EU? How will they respond to his lack of inquisition about single market status, free movement of people and goods? He seems to have taken a lot for granted.
And then there is England’s position – can it (under EU law),have a currency union with a non-Eu country, even one that has entered the application process – what are the rules there? Can the rules that are applied to the UK Banks via EU banking regulations be enforced upon an independent Scotland if they are in currency union with England? Are these banks ‘rUK’ banks for the purposes of regulation because their lender of last resort is the Bank of England in a currency union?
I don’t hear these uncertainties being pointed out in any detail by Mr Peston or any other commentators.
(BTW, in answer to a query above -I believe Mr Peston read PPE at Baliol).
Having just commented on the other thread that I’m not convinced of BBC bias toward the “yes” camp, I have to say that Peston’s comments regarding the refusal to countenance a currency union registered on my bias radar this morning. I’m not sure if it was bias per se or unfortunate phrasing, but I thought Jim Naughtie corrected this somewhat in his interview with John Swinney by pointing out some of the reasons why they wouldn’t countenance it.
Who was it who said that, in politics or political reporting, when ‘you’ become the story, you’re lost.
Mr. Salmond did not answer the questions, because on a plate he had just how untrusted the BBC is… by everyone, and with a few words was applauded for pointing this out.
Credibility blown much?
However, there may be a reason for the applause…
‘Stuffing [interviews, vox pops, QT audiences] with activists who clap at every word from [BFFs] does not, however, bode well for accountability in [supposedly objective, impartial broadcasters].
Either.
The BBC can hardly complain now, can it?
It is being reported now that Peston is exclusively disclosing that there has been a meeting at No 10 this afternoon with supermarket bosses. The BBC inference being that there is some sort of collusion and that they are out to get Salmond.
What is Peston (responsible for a run on Northern Rock?) up to?
You have to realise that with Broon and his ugly party (currently) out of power, leftist Peskon has no reliable source of inside information. With the possibility of doing damage to the Tory-led coalition Peskon does what Al JaBeeBa ‘journalists’ always do – he makes it up and then spins it his way.
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I remember Peston from a few years back
Driving to work one morning I was listening to him on the radio running around Corporal Jones style shouting “Don’t panic!,don’t panic!” over Northern Rock. His version of the problem was almost hysterical compared to the calm analysis of the City bloke I’d just seen on the TV.
As I drove home that evening the radio was reporting long queues outside every branch in the country and a great institution was finished.
Nothing to do with him of course
There is also the small matter of pension fund shortfalls, that of RBS being some £6.5 billion. If the Jockies opt for independence (Inshallah!) there is a requirement for it to be topped up immediately as the fund of a foreign company cannot be in deficit.
So not only did we bail out two Scottish banks in 2008, two out of the 3 UK banks which failed, but we would then have to put up more funds to guarantee the pensions of these soon-to-be foreigners.
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