Currency Reflections: The Campaign

Published: 13 February 2014
Author: John Curtice

Today’s co-ordinated statements by George Osborne, Ed Balls and Danny Alexander that they are not willing to contemplate the prospect of an independent Scotland forming a monetary union with the rest of the UK is probably the most dramatic intervention yet by the No side in the referendum campaign.  Their intention is to make it clear that such a possibility will be off the table irrespective of the outcome of the next UK general election in 2015. But will this prove a decisive move in the battle to win voters’ hearts and minds?

This of course is not the first intimation that monetary union might not be possible. Both George Osborne and Ed Balls (whose sceptical views about another monetary union, the euro, are well known) have previously indicated that they were doubtful of the merits of entering such an arrangement, albeit in less stark terms than they have done today. Those earlier warnings have apparently not gone unheeded.

According to the 2013 Scottish Social Attitudes survey, conducted in the summer and autumn of last year, only 57% of Scots thought that an independent Scotland would use the pound (either inside or outside a monetary union), far less than the 79% who would like to do so. More recently a Panelbase poll for the Sunday Times found that just 41% thought that a monetary union would happen – albeit as many as 29% were unclear what would happen at all.

If before today many Scots had already got the message that monetary union was unlikely, that must at least limit the degree to which the intervention can be a game changer. Rather than being a bolt from the blue, for many it simply represents a confirmation of what they suspected already.

But, in any event, today’s development can only prove critical in changing the shape of the referendum race if what currency an independent Scotland might use matters to them in deciding whether to vote Yes  or No.

So far at least, voters have intimated that it does not. In a recent TNS BMRB poll conducted for Sir Tim Hunter, only 4% said that the issue of ‘currency’ was either the first or the second most important consideration in their minds when deciding which way to vote. In another TNS BMRB poll for BBC Scotland, currency came only eighth in importance in a list of ten referendum issues respondents were asked to rank.

Voters’ self-reports of the importance of the currency issue is reflected in the low degree to which their views and expectations on the issue are reflected in the way that they vote. While 64% of those Scottish Social Attitudes respondents who would like an independent Scotland to use the pound but reckoned it would be unable to do so said they proposed to vote No, so also did 54% of those who both wanted to keep the pound and thought it would be possible to do so. In other words what people thought would happen to the currency made some difference to which way they were proposing to vote, but not a lot.

Equally in the recent Panelbase poll, at 50%, the proportion saying they will vote No amongst those who were not clear that a monetary union would be introduced was only a little higher than the equivalent figure of 44% amongst those who reckoned it would happen.

If the currency issue is to become centre stage in voters’ minds in the way that the No side would like it to, it will have to persuade them that in the absence lack of a monetary union the economic prospects for an independent Scotland will be bleak. The economic consequences of independence is the issue above all that voters say matters to them and which does most to sort voters into Yes and No supporters.

So far, however, the connection between currency and Scotland’s prosperity seems to be absent in voters’ minds. According to the Scottish Social Attitudes survey, while 38% of those who would like an independent Scotland to use the pound but do not expect to do so believe that independence would weaken Scotland’s economy, so also do 35% of those who believe that Scotland would be able to keep the pound. And while Mr Osborne’s speech today provided us with a detailed analysis of why he thinks monetary union would be a bad idea, there was much less on how independence without monetary union would be bad news for Scotland’s economy. That though is the message the No side has to hammer home if it is to turn the currency debate to its advantage.