Salmond chooses the Brownite way

Can you trust someone like Alex Salmond to save Scotland from future crashes? The First Minister appeared on BBC1’s Sunday Politics earlier, where he was challenged about how he sees it. And it seems he may just be a graduate of the Gordon Brown school of Scottish financial mismanagement.

In a Times debate on Friday,  SNP deputy leader Nicola Sturgeon said they’d use sterling — whether the Bank of England liked it or not — and would not need the Bank to be a lender of last resort because Scotland would be so sensible it wouldn’t need it. An interesting suggestion, given that the 1707 Union between Scotland and England is the result of a bailout. Anyone who thinks those days of recklessness are gone should ask why Bank of Scotland and RBS needed to be bailed out by the Treasury. Would an SNP government be stricter with its banks? We already know, thanks to a letter unearthed by Channel 4’s Faisal Islam, that Alex Salmond urged Fred the Shred to do the ABN Amro deal than sank RBS. He just couldn’t help interfering, offering any help that was needed. This is the type of corporatism — when banks and vain politicians start to act in concert — that can sink a country financially.

Another question: would an SNP government be more strict with the deficit? Small countries tend to have a no-deficit policy: Sweden, Denmark, New Zealand, Luxemburg and Estonia all did in the years before the crash. All are in pretty good shape now. So you’d think the SNP, witnessing the humiliating collapse of Scotland’s two flagship banks, might adopt the same kind of cautious policy — especially if there was no safety net. Sturgeon’s quotes seemed to suggest this. But when asked on Sunday Politics how he’d manage Scotland’s finances while keeping Sterling, Salmond suggested a eurozone-style ‘fiscal pact’. He specificed:

‘Let’s say your stability pact said that over the long term your borrowing shouldn’t exceed 3 per cent of GDP, over the long term. Well, I would argue that’s no more than the fiscal discipline that a sensible country would have in any case.’

This 3 per cent deficit rule was Gordon Brown’s, a notorious scam that allowed him to jack up the national debt even during the boom years. This left Britain entering the crisis with one of the worst deficits in the developed world. And this appears to be what Salmond imagines Scotland would do. It’s an odd example to choose. He could have said that Scotland would commit to running a surplus every year under the SNP, a policy many small countries adopt. Why didn’t he take this option?

Most unionists believe the figures don’t stack up on an independent Scotland: that the tax raised within its borders would never cover the spending, not even with all the oil in the North Sea. So an independent Scotland would either have to implement Greek-style austerity or be dependent on permanent Brown-style borrowing. Salmond’s comments today suggest that he’s mulling the latter option.