Independent Scotland would have to adopt euro after joining EU
By Georgina Lee-20 Mar 2019
As the Brexit brouhaha continues in Parliament, senior SNP figures have suggested that there’s an ever-pressing need to reopen the question of Scottish independence.
A beady-eyed FactCheck reader asked us to look into an exchange between the party’s Westminster leader, Ian Blackford, and Sky News’ Kay Burley on what would happen if Scotland ditched the UK and rejoined the EU.
They were at odds over whether an independent Scotland would have to abandon sterling and adopt the euro. Let’s take a look at what we know.
Kay Burley: So you would accept the euro and say goodbye to sterling?
Ian Blackford: No, because there’s no proposition to do that.
KB: Because, as you know, if you are a new country joining the European Union, you have to accept the euro.
IB: No we don’t, Kay.
KB: Yes, you do.
IB: Let me explain that to you.
KB: […] the European advisors are telling us: any new country that joins the European Union has to adopt the euro.
IB: […] To join the euro, you have to join the Exchange Rate Mechanism too, as a transition for that, and you have to be in the Exchange Rate Mechanism for two years. Joining the Exchange Rate Mechanism is entirely voluntary. You can’t be forced into the euro against your will. The last three countries that have joined the EU have not joined the euro.
But Mr Blackford is wrong to say that “joining the Exchange Rate Mechanism is entirely voluntary”.
The EU has been consistent on this point for years.
The Commission President Jean-Claude Juncker said in 2017, and the Vice President, Valdis Dombrovskis, reiterated in 2018, “The euro is meant to be the single currency of the European Union as a whole. All but two of our Member States are required and entitled to join the euro once they fulfil the conditions”.
To be clear, the UK is one of the two countries, alongside Denmark, that secured a legally-binding opt-out from the eurozone in the Maastricht Treaty. We looked at Esther McVey’s misleading claims on this last week.
But if an independent Scotland joined the EU, it would have to adopt the euro at some point, after two years in the ERM, or else find itself “not fully compatible” with a key piece of EU law — the Treaty on the Functioning of the European Union.
Mr Blackford says “the last three countries that have joined the EU have not joined the euro”. He’s technically correct, but it would be more accurate to say “the last three countries that have joined the EU [Bulgaria, Romania and Croatia] have not yet joined the euro”.
Brussels says: “it is up to individual countries to calibrate their path towards the euro and no timetable is prescribed.”
The member states that joined in 2004, 2007 and 2013 “did not meet the conditions for entry to the euro area at the time of their accession. Therefore, their Treaties of Accession allow them time to make the necessary adjustments.”
In other words, the new additions weren’t ready for the euro and have been given more time to prepare. But there’s no suggestion that those countries are exempt from the legal requirement to eventually adopt the single currency.
But if Mr Blackford wants to use the experience of the three most recently-minted members (Romania, Bulgaria and Croatia) to make his point, he must accept that these countries are on the road to euro membership.
As it stands, it’s unlikely an independent Scotland would be able to avoid adopting the euro indefinitely. And indeed, it’s not clear that even if Scotland could dodge the euro requirement, it could, or would want to, keep the pound.
The idea of a UK-Scotland currency union was shot down by then-Chancellor George Osborne, and by the Bank of England, in the run-up to the 2014 independence vote.
Strictly speaking, there’s nothing to stop Scottish businesses and consumers using the pound – or any other currency for that matter – even without the UK’s consent.
But that would mean Scotland had no say over its monetary policy, which governs interest rates and currency exchange rates. It would be up to a future Scottish government to decide whether this was worth it.
In 2018, the SNP’s Growth Commission said the country could use sterling for 10 years after quitting the UK, and then move towards creating its own currency.
A beady-eyed FactCheck reader asked us to look into an exchange between the party’s Westminster leader, Ian Blackford, and Sky News’ Kay Burley on what would happen if Scotland ditched the UK and rejoined the EU.
They were at odds over whether an independent Scotland would have to abandon sterling and adopt the euro. Let’s take a look at what we know.
The claims
Here’s how the Sky News conversation went:Kay Burley: So you would accept the euro and say goodbye to sterling?
Ian Blackford: No, because there’s no proposition to do that.
KB: Because, as you know, if you are a new country joining the European Union, you have to accept the euro.
IB: No we don’t, Kay.
KB: Yes, you do.
IB: Let me explain that to you.
KB: […] the European advisors are telling us: any new country that joins the European Union has to adopt the euro.
IB: […] To join the euro, you have to join the Exchange Rate Mechanism too, as a transition for that, and you have to be in the Exchange Rate Mechanism for two years. Joining the Exchange Rate Mechanism is entirely voluntary. You can’t be forced into the euro against your will. The last three countries that have joined the EU have not joined the euro.
Who’s right?
It’s true that “to join the euro, you have to join the Exchange Rate Mechanism”, which helps stabilise the outgoing currency and smooth the transition into the eurozone, for two years.But Mr Blackford is wrong to say that “joining the Exchange Rate Mechanism is entirely voluntary”.
The EU has been consistent on this point for years.
The Commission President Jean-Claude Juncker said in 2017, and the Vice President, Valdis Dombrovskis, reiterated in 2018, “The euro is meant to be the single currency of the European Union as a whole. All but two of our Member States are required and entitled to join the euro once they fulfil the conditions”.
To be clear, the UK is one of the two countries, alongside Denmark, that secured a legally-binding opt-out from the eurozone in the Maastricht Treaty. We looked at Esther McVey’s misleading claims on this last week.
But if an independent Scotland joined the EU, it would have to adopt the euro at some point, after two years in the ERM, or else find itself “not fully compatible” with a key piece of EU law — the Treaty on the Functioning of the European Union.
Mr Blackford says “the last three countries that have joined the EU have not joined the euro”. He’s technically correct, but it would be more accurate to say “the last three countries that have joined the EU [Bulgaria, Romania and Croatia] have not yet joined the euro”.
Brussels says: “it is up to individual countries to calibrate their path towards the euro and no timetable is prescribed.”
The member states that joined in 2004, 2007 and 2013 “did not meet the conditions for entry to the euro area at the time of their accession. Therefore, their Treaties of Accession allow them time to make the necessary adjustments.”
In other words, the new additions weren’t ready for the euro and have been given more time to prepare. But there’s no suggestion that those countries are exempt from the legal requirement to eventually adopt the single currency.
How would this apply to Scotland?
We don’t know how a hypothetical independent Scotland would negotiate its accession to the EU. It’s possible that it could secure an opt-out from the requirement to eventually join the eurozone.But if Mr Blackford wants to use the experience of the three most recently-minted members (Romania, Bulgaria and Croatia) to make his point, he must accept that these countries are on the road to euro membership.
As it stands, it’s unlikely an independent Scotland would be able to avoid adopting the euro indefinitely. And indeed, it’s not clear that even if Scotland could dodge the euro requirement, it could, or would want to, keep the pound.
The idea of a UK-Scotland currency union was shot down by then-Chancellor George Osborne, and by the Bank of England, in the run-up to the 2014 independence vote.
Strictly speaking, there’s nothing to stop Scottish businesses and consumers using the pound – or any other currency for that matter – even without the UK’s consent.
But that would mean Scotland had no say over its monetary policy, which governs interest rates and currency exchange rates. It would be up to a future Scottish government to decide whether this was worth it.
In 2018, the SNP’s Growth Commission said the country could use sterling for 10 years after quitting the UK, and then move towards creating its own currency.
