Smaller is better: Disintegrated nations in an integrated Europe
Edoardo Campanella 12 August 2014
Separatism is on the rise in Europe. This column argues that, while the Eurozone Crisis is certainly reinforcing regional tensions, the underlying causes are globalisation and the deepening of the European project. Independence campaigners want access to the larger European market, while unfettering their regions from the centralised control of national governments. Renegotiating the terms of the relationship between national and regional governments is preferable to resorting to political threats or the use of force.
Throughout the course of history, there are few regions in the world whose map has changed as frequently and abruptly as that of Europe. Nowadays, political forces – less violent and bloody than in the past, but equally destructive – are slowly and imperceptibly eroding the borders of several countries. Tensions within states – not enmities among competing powers – are remodelling the political geography of Europe.
Europe's nations and regions Global governance Politics and economics
EU, regionalism, independence, Eurozone crisis, Catalonia, Scotland, separatism, secessionism, Flanders
Scottish independence in an interdependent world: New evidence
Andrew Hughes Hallett 20 June 2014
The UK and Scottish governments are engaged in a set of parallel and overlapping games in the economic and political arenas. This column presents research that analyses how decisions about whether to cooperate over financial regulation, fiscal rules, and the choice of currency and monetary policy, will all have far reaching implications for a newly independent Scotland and the rest of the UK.
Any economy must have a policy framework designed to manage the three basic macroeconomic imbalances:
- The private financing (savings-investment) gap;
- The public spending-revenues (fiscal) gap; and
- The foreign financing (trade) gap.
These imbalances imply a need for financial regulation, fiscal rules, and a currency/monetary policy choice, respectively. A newly independent Scotland would be no exception.
Europe's nations and regions Monetary policy
monetary independence, currency union, Scotland, Scottish independence
Scotland would not be better off as an independent nation: results from the Centre for Macroeconomics June Survey
Angus Armstrong, Francesco Caselli, Jagjit Chadha, Wouter den Haan 07 June 2014
Would Scotland be better off in economic terms as an independent country? Not according to an overwhelming majority of respondents to the third monthly survey of the Centre for Macroeconomics (CFM), summarised in this column. As the Scottish electorate prepares to vote on independence in September, a smaller majority of the CFM experts agree that the UK would be acting in its own economic interests by ruling out a monetary union with an independent Scotland.
The Centre for Macroeconomics (CFM) - an ESRC-funded research centre including the University of Cambridge, the London School of Economics (LSE), University College London (UCL) and the National Institute of Economic and Social Research (NIESR) - is today publishing the results of its third monthly survey. The surveys are designed to inform the public about the views held by leading UK-based macroeconomists on important questions about macroeconomics and public policy.
Politics and economics
devolution, Scotland, Scottish independence
A well-designed sterling union will be needed if Scotland votes for independence
Oliver Harvey, George Saravelos 28 May 2014
Much ink has been spilled over Scotland’s currency options in the event of independence. This column argues that a breakup of the sterling area would be truly unprecedented. The sterling union is unique because it services a unitary state with a highly integrated and complex financial sector, an indivisible payments system, and an overlapping legal system. Politics aside, neither a unilateral nor a mutual break-up would be credible, leaving a negotiated currency union as the only option. However, as the Eurozone crisis demonstrates, a badly designed currency union could be exceptionally costly.
The currency options of an independent Scotland have become a crucial point of contention for both sides ahead of the September 2014 referendum. However, the debate has so far focused on the suitability of different regimes based on the optimal currency area framework or fiscal implications (Armstrong 2013). There has been little focus on the practical issues involved. This is problematic because a breakup of the sterling area would be historically unprecedented and uniquely complex.
Europe's nations and regions Monetary policy
monetary independence, currency union, Bank of England, Currency unions, Scotland, sterling, Scottish independence
The Scottish question
Angus Armstrong, Monique Ebell 26 October 2013
In the debate over Scottish independence, the question of how the UK’s assets and sovereign debt would be divided has received insufficient attention. This column argues that the size of Scotland’s debt obligations would be crucial to its optimal choice of currency. Under plausible assumptions, fiscal tightening would be required to return Scottish debt to sustainable levels, and a self-fulfilling rise in borrowing costs might tempt Scotland to leave the sterling currency union. A debt-for-oil swap might be mutually beneficial for a newly independent Scotland and the continuing UK.
In less than one year, on 18 September 2014, the Scottish electorate will vote on a question of historic significance – should Scotland remain in the UK, or should it become an independent country?
But what would an independent Scotland look like? We think that one important question that has not received nearly enough attention is debt. How will the existing UK government debt be divided between an independent Scotland and the continuing UK – assuming the remaining home nations constitute the continuing UK (Tierney 2013)?
Europe's nations and regions Macroeconomic policy
independence, debt, Currency unions, Scotland, sterling