Scotland needed UK to bail out banks, concedes Salmond

Further to the concession by leading pro-Nationalist economist Andrew Hughes Hallet that an independent Scotland would have needed outside help to rescue RBS and HBOS - spun as a "shared responsibility" and distorted by some as a pro-independence argument - SNP leader Alex Salmond recently confirmed this point in an interview with the BBC News Channel's Hard Talk programme.

Questioned on the perennial doubts over whether Scotland alone could have mustered the financial muscle to launch a bail-out, Mr Salmond said that the responsibility lay with the relevant monetary authorities, which post Scottish independence would either be the Bank of England or the European Central Bank, depending on which day of the week...er...whether Scotland had retained sterling or joined the euro party. Dubiously dismissing the point about the requisite capital injections, Mr Salmond continued regarding:

...financial support for the banking sector which depends on the currency area you're in, and as you well know we're not proposing to have a separate Scottish currency, Scotland will either be part of the sterling area or part of the euro area, responsibility for general financial support, currency support, liquidity support comes with the central bank whose monetary area you're in.

Pressed by Stephen Sackur on the fact this this meant Scotland could still be reliant on the "British banking system, English banking system", Mr Salmond said:

The argument we have is not to have an independent Scottish currency, but to have economic independence [sic!], to have control of our fiscal policy, and there the evidence...is not just strong it is beyond argument [sic] that that discretion over fiscal policy will lead to an increase in the Scottish rate of growth and that will increase revenues which will offset some of the otherwise enormous fiscal problem that we in common with the rest of the United Kingdom, otherwise will face.

Change the subject, who don't you! Of course, it's that simple, and beyond argument - give Scotland fiscal autonomy and we will power ahead of the UK in terms of economic growth. But the recent Tartan Tax hoo-hah and the SNP's ill-fated "Penny for Scotland" a decade ago demonstrates the reluctance of the major parties to raise income tax, thus it's all about borrowing powers and more debt.

Which leads on to another jaw-dropping moment in the interview, when Mr Sackur pointed out that an independent Scotland would have a deficit amounting to 12% of GDP. He then conceded that the UK would have a deficit a teensy-weensy bit more than 12%, thus providing Mr Salmond with his Eureka moment, as if a marginal difference in debt levels provided a compelling rationale for independence.

And his growth argument presupposes taking on more debt initially, thus rather defeating his point, and of course the possible exemplar of the delusion that debt-fuelled growth could continue in perpetuity - and indeed repay the borrowings - was a certain Mr Gordon Brown.

There was also the usual concentration on the fortunes of Norway, but little about the PIGS (is the plural PIGSS?), and blaming the UK for the spending splurge and consequent squeeze (a spending addict blaming his dealer?), but the other highlight was when Mr Salmond compared a virtuous Scottish finance minister to a profligate chancellor of the exchequer, saying:

When Alistair Darling was borrowing £170 billion, John Swinney wasn't borrowing anything at all, his contribution to that massive borrowing was zero. John Swinney produces a balanced budget.

Er, John Swinney doesn't have borrowing powers, so this is making a virtue of necessity. And the SNP do want borrowing powers, and clearly Mr Salmond considers that a substantial and ongoing sovereign debt for Scotland would be necessary to progress economic growth. It's also disingenuous to suggest that John Swinney's contribution to UK public borrowing is zero, since the latter has been necessary to maintain and indeed grow Scotland's public spending since devolution.

Thus a bit like a spendthrift child making a virtue out of the fact that they're debt-free, while their parents are taking on huge loans to pay for it all.

Of course, it's this parent/child and the pocket money analogy that nationalists fundamentally object to, but perhaps if Alex Salmond demonstrated a more adult approach then allowing the child to leave home would appear more palatable.

The feckless parents indulging their offspring was hardly an object lesson in responsible government either!