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Monday, 25 August 2014

Scotland ‘should not take on UK debt’ unless it can keep the pound says leading economist

Professor Sir James Mirrlees

Scotland ‘should not take on UK debt’ unless it can keep the pound

Yes campaign’s economist plots way ahead if Westminster refuses to share sterling

In this article by Ambrose Evans-Pritchard, in the Daily Telegraph today 25.0.14, the usual British line that the UK will continue as RUK if Scotland "leaves" is still being peddled. However if you ignore the blatant RUK nonsense then this article also illustrates why England would be bettter off independent from the near bankrupt UK too.

Here is the article:-

An independent Scotland should walk away from its share of the UK’s national debt if Westminster continues to refuse a sterling union, one of the Yes campaign’s leading economic gurus has advised.

“Britain inherits the debt,” said Sir James Mirrlees, a Nobel Prize-winning economist and a prestigious figure on Scotland’s Council of Economic Advisers.

“It is hard to see how Scotland can take on the debt unless there is a full currency union,” he told The Telegraph. “This is implied by the hard-line taken by Westminster. It is Scotland’s bargaining position.”

Crawford Beveridge, chairman of Scotland’s Fiscal Commission Working Group, warned last week that any such move would be “morally difficult” and likely deemed a “default” by credit ratings agencies.

Not even the Baltic states entirely repudiated Soviet-era debts in the early 1990s, even though the Soviet occupation of their countries was never recognised by the West. It would be hard for Scotland to invoke the “doctrine of odious debts” – where debts run up by despotic regimes can legitimately be reneged on – under international law. The Czech and Slovak republics divided the Czechoslovak debt on a pro-rata basis after their “velvet divorce”.

Sir James said Scotland could continue to use the pound as legal tender inside the country if necessary, whatever London decides. “No country has stopped its currency from being circulated in another state that I know of,” he said.

He suggested that Edinburgh could equally issue a Scottish pound that is pegged to sterling and backed by a currency board along the lines of Hong Kong’s model. But, in his opinion, neither option, if forced upon Scotland, would entail any obligation to take on UK debt.

Sir James said this clash can be avoided. He believes the common sense option for all involved is to agree on a co-operative union. The British themselves would enjoy a “non trivial” benefit from being able to use their own coin in Scotland. “The easiest transition would be to keep using sterling for five to 10 years,” he said.

All three parties in Westminster say they will oppose a currency union after independence, insisting that the eurozone crisis has revealed the perils of trying to share a currency with separate fiscal policies. Sir James played a central role in First Minister Alex Salmond’s Fiscal Commission earlier this year in drafting plans for a future currency. A former Cambridge professor, he is now professor-at-large at the Chinese University of Hong Kong.

He said the eurozone currency experiment has gone badly wrong – and has previously called for the weaker Club Med countries to withdraw – but insists that a UK-Scottish currency union would be a different animal. “The risks have been greatly exaggerated,” he said, speaking at the Nobel laureates’ gathering in Lindau, Germany.

Sir James said the English and Scottish economies are closely interwoven, like Germany and The Netherlands. There is little danger of an “asymmetric shock” for Scotland alone, though he acknowledged that declining oil revenues are a “little worrying” and might force fiscal cuts. However, he appeared to suggest that this would be outweighed by the benefits of eliminating the entire public debt, freeing up interest payments.

The National Institute of Economic and Social Research estimates Scotland’s share of the debt to be £143bn. The UK authorities have announced that they would stand behind these liabilities in order to reassure markets – and will even stand behind RBS and Scottish-based banks temporarily – but this is intended to be a holding action, not a settlement.

Debt repudiation would cause the UK’s gross debt ratio to jump by seven points to 98pc of GDP on the Eurostat gauge. Critics say it would be an inglorious way for Scotland to begin its life as a sovereign nation, poisoning relations with its chief economic partner.

Use of sterling in the face of British opposition would leave Scotland without a lender-of-last resort in a crisis. Sir James said this is manageable if bank support is restricted to high street operations, excluding the global arm of banks such as RBS.

Sir James has equally radical views on taxation, though they are not specifically aimed at Scotland. He proposes “negative taxation” or subsidies for the West’s poorest workers to shield them from low-wage competition from Asia. He also endorses a top marginal tax rate of 100pc for “very high incomes” on the grounds that some people will continue to work regardless, specifically citing tennis players. This may come as a surprise to Scottish tennis star Andy Murray.

Click here for a link to the original article>>>

Below is what Wikipedia says about the Professor. Who do you believe - him or Ambrose from the Telegraph?

Sir James Alexander Mirrlees FRSE FBA (born 5 July 1936) is a Scottish economist and winner of the 1996 Nobel Memorial Prize in Economic Sciences. He was knighted in 1998.

Born in Minnigaff, Kirkcudbrightshire, Mirrlees was educated at the University of Edinburgh (MA in Mathematics and Natural Philosophy in 1957) and Trinity College, Cambridge (Mathematical Tripos and PhD in 1964 with thesis title Optimum planning for a dynamic economy), where he was a very active student debater. One contemporary, Quentin Skinner, has suggested that Mirrlees was a member of the Cambridge Apostles along with fellow Nobel Laureate Amartya Sen during this period. Between 1968 and 1976, Mirrlees was a visiting professor at MIT three times. He taught at both Oxford University (1969–1995) and University of Cambridge (1963– and 1995–).

During his time at Oxford, he published papers on economic models for which he would eventually be awarded his Nobel Prize. They centred on situations in which economic information is asymmetrical or incomplete, determining the extent to which they should affect the optimal rate of saving in an economy. Among other results, they demonstrated the principles of "moral hazard" and "optimal income taxation" discussed in the books of William Vickrey. The methodology has since become the standard in the field.

Mirrlees and Vickrey shared the 1996 Nobel Prize for Economics "for their fundamental contributions to the economic theory of incentives under asymmetric information".

Mirrlees is also co-creator, with MIT Professor Peter A. Diamond of the Diamond-Mirrlees Efficiency Theorem, developed in 1971.

Mirrlees is emeritus Professor of Political Economy at the University of Cambridge, and Fellow of Trinity College, Cambridge. He spends several months a year at the University of Melbourne, Australia. He is currently the Distinguished Professor-at-Large of The Chinese University of Hong Kong as well as University of Macau. In 2009, he was appointed Founding Master of the Morningside College of The Chinese University of Hong Kong.

Mirrlees is a member of Scotland's Council of Economic Advisers. He also led the The Mirrlees Review, a review of the UK tax system by the Institute for Fiscal Studies.

His students have included eminent academics and policy makers Sir Partha Dasgupta, Professor Huw Dixon, Lord Nicholas Stern, Professor Anthony Venables, and Sir John Vickers.


  1. Robin the establishment know full well yhay a yes means the end of tbe uk

    Time to take matters to Russia


  2. Francis- that 2nd comment has me guessing.
    Do you mean follow Putin's pattern of retribution in Ukraine gas pricing by bending the pounds rate for Scotland? [I'd hate to ask his advice, tbh.. ]
    The talk of a Scots debt default is cringe-worthy to me!

    1. Hi

      What i mean is that we English Nationalists need to make direct contact with Pres Putin in the same way Nick Griffin met the Syrian government and stopped the war against Syria last year

      We cannot trust the UK government to deal with any matter. After last nights darling v salmond debate i think yes are now in the ascendancy and likely to win

      The UK is about to break up with Scotland leaving in 2016 while at that time the rc community in n ireland will become the majority for the first time in 400 years which will rightly trigger a border Poll.I actually want the republicans to win that poll simply because of the hypocritical nature of unionists blocking English home rule.


    2. The Russians were tired of not being paid for the cheap gas they were supplying to the Ukraine. What has happened in the Ukraine has all been the work of Washington and their EU lapdogs for the sake of the financial-industrial and military complex. The Ukrainians are the losers, not only the ethnic Russians who are being slaughtered and forced to flee.
      The Neocons, most of whose ancestors hail from the Tsarist pale, are bent on revenge and their mates on ransacking the Ukraine for their own financial gain. Joe Biden's son has already been given a plumb job there. This is the son of a Democrat? vice president.

  3. I know this is off topic but Anglophobic Leftist Dan Hodges has recognised anti-English discrimination in Rotherham:-

    He off course fails to mention the E word


  4. Francis. That is news to me; that Nick Griffin met President Assad. I don't remember it being covered by the BBC - I wonder why? Personally, I still have my suspicions that Griffin works for MI5. As for Syria, even the Americans are beginning to realise that they will have to join forces with Assad to destroy the Islamic State they have created. This will mean upsetting their jihadists friends and buyers of arms in Saudi Arabia but they can't have it both ways. Actually, there was a comment that bringing down Assad was as way of getting at Tehran and Israel was mentioned. Well, there's a suprise!! According to Rodney Shakespeare, Israel's aim is to weaken all nations in the Middle East and North Africa with a view to creating great Israel from the Nile to the Euphrates.

    Interesting what you say about Northern Ireland. Apparently, Orangemen were marching in Scotland in support of the Union the other day and the whole independence issue is being overshadowed by sectarianism; Salmond is a catholic. Following the debate Salmond won overwhelmingly but the no campaign are still a few points ahead but with 14% still undecided.

    I am a bit mystified as to how this meeting between Putin and Poroshenko is suddenly happening in Byelorus. It seems that the anti-Kiev separatists have ultimately won. I see there is still no news of the black boxes because how do you tell the world that the CIA were behind the shooting down of that plane? I thoroughly recommend that Robin gets himself on a plane and asks to meet said Putin and explains the plight of the English. The Russians are well aware of how the New World Order is bent on the end of the rest of Europe and Europeans; hence Russia's resistance. However, I remember that Robin met some Russian nationalists a few years ago and I am not quite sure how the Kremlin views them so that might be a problem. Fascinated to watch the final episode of Orlando Figes' programme on the daughters of the Tsar and the fact that Putin has not only had the Romanovs reburied in St Petersburg but that they have been canonised, the house in which they were murdered demlolished and a beautiful new Cathedral of the Holy Blood, consecrated in 2003, built on its site. Come 2017 it will be as if the revolution imposed on Kiev by Wall Street and the City of London never happened and Russia is now what it would have been if it had been left alone.

    Meanwhile, are you aware, Robin, that come 1st November Federal Europe will be here. Hence Cameron's delaying the referendum until it is too late. Brussels will have control of immigration, the police, defence and nearly all our laws. Can you give us chapter and verse? This will be as the English get closer and closer to extinction.

    As for cultural enrichment, apparently London's gang culture is undergoing a revival. The piece on RT showed that it is, as we knew and as in the US, something along with the drugs they fight over, confined to those of African heritage; plus we have Kurdish refugees forming gangs as well. Hopefully, they at least will have their own homeland soon and can go home, The police seemed to be all native English whom the gangs do not trust; shades of Ferguson Missouri just as Enoch warned. I am told that the Islamic state already has a foothold in Bradford and Birmingham.

    I am still waiting for all these ernest dogooding Europeans, both here in the US, who thought that pluralism was so desirable to ask why those in China, Japan, India ( they have enough trouble with religion without adding race to the mix) and Black Africa are not also clamouring for it.

  5. The Nobel prize winning economist Prof Joseph Stiglitz says that regarding the rejection of a currency union [between an independent Scotland and England] by the Conservatives, Labour and the Liberal Democrats, they are for the most part bluffing.

  6. The Scottish nationalists want not just their penny and their bun. Oh, no! They want their penny, their bun, and jam on it, and cream on the jam! Their approach is, in three words, take, take take.
    Look at Nicola Sturgeon's line regarding the division of U.K. assets in the event of Scottish independence. In a nutshell, she said that Scottish assets would remain Scottish, (fair enough) U.K. assets domiciled in Scotland would become Scottish, whilst England would have to buy out "Scotland's share" of U.K. assets domiciled in England.
    Scotland has a (substantial, if our Nicola is to be believed) stake in U.K. assets but apparently none in U.K. liabilities.
    Yes, we need a "Yes" vote in order to dismantle the U.K. But England's fate will be in the hands of weak-willed British negotiators. A worrying prospect!