When it comes to the currency, Alex Salmond has picked the wrong battle
George Osborne is often seen as a highly political chancellor, but his speech on Scottish independence today was actually quite technical. And, to be blunt, in economic terms, his case was pretty much unarguable.
Alex Salmond often says that it is absurd to say that, in reality, if it came to it, the rest of the UK would want to exclude Scotland from the pound, because so much of its trade would be with a newly independent Scotland and businesses simply wouldn't stand for the uncertainty that comes from dealing with a separate currency.
Up to a point, this is true. It is also correct to say that the general predictions of dire consequences for the Scottish economy may be somewhat overdone, since no one really knows how an independent Scotland might perform.
But on the currency, Alex Salmond has picked the wrong battle. He says "it is our pound, too.'" Well, sure, but Osborne is right to say that a currency is not like a CD collection to be divided in the event of a divorce. It is a means to an end, not an object to be fought over.
Read: Sturgeon dismisses Osborne's 'campaign rhetoric'
The euro crisis and the total collapse it almost triggered in the European economy is seared into the consciousness of all modern politicians. They understand that without banking and fiscal union, currency union is inherently unstable. Imagine the English - and Welsh and Northern Irish - agreeing to underwrite a bank of RBS's size in Edinburgh without having any control over its activities, or agreeeing to underwrite greater borrowing by politicians north of the border who wanted to spend more money on social welfare? It is just not going to happen. I don't think you can even say that is a matter of opinion. In the Westminster climate of this time, it is a cold, hard reality.
Now, of course, the position is nuanced. If Scotland became independent - with its own currency - and RBS went bust, would the rest of the UK really not help out? Forget altruism, the cost to the rest of us of a floundering Scotland might be considerable, in which case a loan would make sense. After all, this is what we did for the Irish.
But the basic bottom line is this; when Westminster politicians say they can't guarantee a currency union, they mean it. It might be more accurate to say that one would be possible if Scotland accepted fiscal and banking union, but that is a more complex position that doesn't sit so easily on a press release and anyway, one might argue there is not much point in the Scots voting for independence if they then have to give back much of their hard won freedom.
It is a curious position for a smart politician (and distinguished economist) like Alex Salmond to have got into.