In a few weeks’ time, the Scottish electorate will vote a new parliament into Holyrood with all the pundits predicting a majority for Nicola Sturgeon’s SNP. She will campaign on the basis that a majority gives the SNP a mandate for a second independence referendum to be held early in the new parliament. This is despite constitutional matters being reserved to the UK parliament and despite previous SNP assurances that they would respect the democratic result of the 2014 referendum for a generation.
For those of us who recoil in horror at the thought of another bitter and divisive referendum in Scotland, especially in the middle of the Covid pandemic, it is incumbent upon us once again to advance the positive arguments in favour of the UK. I believe the most important weapon of all is sterling, the sovereign currency of the UK.
Since the date of first issuance of government gilts in 1691, the UK has never once defaulted on its debts. The three record high periods of government borrowing were the Napoleonic Wars in the early 19th century (300 per cent of GDP) and the two world wars of the 20th century (200 and 250 per cent of GDP respectively). The cost of World War II was repaid in 50 instalments, the last of which was settled with the US and Canada in 2006.
Current UK Government borrowing at the year ended March 2020 was 85 per cent of GDP and this is estimated to increase to 100 per cent post-Covid. This clean history of borrowing and repayment is an enormous legacy for the modern United Kingdom and one which now – as we seek to combat the SNP’s quest for division – we should exploit. As someone who has spent a life around Britain’s money markets, I want to us weaponise our currency dividend for the Union.
Sterling is the ‘share price’ of the UK as a sovereign economic entity which gives us access to international capital markets.