angloscot \sterlingzone\ must cut both ways
Last Updated : GMT 03:38:25
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Anglo-Scot \'sterlingzone\' must cut both ways

Arab Today, arab today

Arab Today, arab today Anglo-Scot \'sterlingzone\' must cut both ways

Brussels - AFP

England would need to grant Scotland oversight powers over London budgets and taxes if an independence referendum leads to a new "sterlingzone" currency union, a top eurozone official said. "If you had a 'sterlingzone' of England and Scotland, you'd need probably a joint process of scrutiny of budget plans -- so that Scotland [too] could veto aspects of the English budget," leading European Union official Thomas Wieser told AFP in an interview. A cross-party campaign to keep the United Kingdom a unitary state will be launched later Monday, and the question of how an independent Scotland would share the use of sterling with the British state will be a key theme. Unionists argue that keeping the pound would leave an independent Scotland under London fiscal control. US-born Austrian Wieser suggests that the eurozone crisis shows markets would demand the rules underpinning a sterling union to cut both ways -- Edinburgh and London sharing rights as well as responsibilities. Wieser, who chairs the Brussels-based Euro Working Group that prepares Eurogroup finance ministerial talks, said both partners in a sterlingzone would need to hold powers to "put a brake on any behaviour that may lead to deficits or debt being created." Referring to huge variations in eurozone borrowing rates, he said: "The problems we have at present show very clearly the degree of financial market supervision and fiscal union that are required in order to retain or run successfully a monetary union. "We are at the beginning of a debate -- how much of a fiscal union is possible, how much is desirable and how much is necessary? We simply don't know," Wieser said. EU leaders are to meet at a summit in Brussels on Thursday and Friday in an attempt to hammer out a roadmap towards banking and fiscal unions within the eurozone amid negotiations over bailouts for Greece and Spanish banks. "What we do know is that the present fiscal rules that we have [in the eurozone] are quite stringent -- but if there needs to be exercised a certain degree of solidarity amongst members of, let's say, a sterlingzone, then you need to have binding rules which are binding on everybody." In practice, the economies of England and Scotland are already in tune to a great degree, more like those of Germany and the Netherlands than Berlin and Athens. Conceivable budgetary rows might focus on trillions of pounds spent on nuclear weapons from London, or what England sees as anachronistic free higher education already offered under significant devolved powers in Edinburgh. First Minister Alex Salmond also announced in Los Angeles last week plans to undercut London business tax rates following independence -- the latest irritation for London. Salmond's Scottish National Party is seeking a 90-percent share of oil and gas tax receipts if Scotland backs his vision of inter-dependent sovereignty in a referendum scheduled in for 2014. Unionists are banking on the currency question to build momentum for their campaign after the eurozone's problems led to Moody's downgrading major British banking groups last week. The latest polls show bedrock support for independence hovering around 35 percent, although one in five are undecided. The No campaign will be led by Labour's former finance minister Alistair Darling. Despite being accused by Conservative coalition leaders of leaving Britain on the hook for eurozone bailouts, Prime Minister David Cameron chose Darling as the Tories have just one MP in Scotland. Ahead of the Edinburgh launch, Darling told The Guardian newspaper that Westminster might call a referendum in England, Wales and Northern Ireland over the creation of a formal currency union with a sovereign Scotland. "I'm not saying this will happen at all but all I'm saying is that you can't automatically assume that the rest of the UK will want to enter into the arrangements that the nationalists are talking about," he said. John Swinney, Scotland's finance minister, told a recent conference that a rules-based sterlingzone post-independence would give businesses "certainty and stability for trade, investment and growth."

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