Would an independent Scotland have to use the euro? The answer is “No”. Nicola Sturgeon was correct when she told Douglas Ross this today – but that doesn’t prevent Scotland’s Unionist politicians and media doing their best to spread confusion.
The Times headline today was “Join the euro or your EU dream dies, Sturgeon told”. It is technically correct that Scotland will have to pledge to being open to joining the eurozone. But Scotland will control the timeline on that. It may not decide to join for decades.
Yes, Scotland would have to pledge to being open to join the euro at some point in the future. It could take 15 years, like Bulgaria which is adopting the Euro in 2024, or much longer. Sweden, Denmark, the Czech Republic and Poland have no current plans to switch.
So, if the question is worded:
“Would an independent Scotland joining the EU as a full member using the process for joining as a new member have to commit to using the Euro at some undefined point in the future?” Then the answer is yes.
But whether or not to join the Euro and the timing of that will be a matter for future governments. It will be a matter for debate after Scotland has: achieved a referendum, voted for independence, established a central bank, a Scottish currency and rejoined the EU. It’s a way down the road.
Scotland’s currency future will be Scotland’s choice
Last week’s Scottish Government report “Building a Stronger Economy” includes a section discussing comparable European countries’ currency choices. It says:
“Austria, Belgium, Ireland, Finland and the Netherlands share a currency – the euro – while Denmark, Iceland, Norway, Sweden and Switzerland have their own currencies. However, Denmark pegs its currency to the euro (meaning that it shared a fixed exchange rate with the euro) and shares it with Greenland and the Faroe Islands. The decision to peg to the euro is a policy choice: Denmark’s main trading market is the European Union, so pegging provides price stability for trade.
“All of those countries, regardless of currency choice, have higher national incomes per head than the UK.”
The best way to explain the euro position is to quote the European Union itself:
EU advice: Are the Member States obliged to join the euro?
“In principle, all Member States that do not have an opt-out clause (i.e. Denmark) have committed to adopting the euro once they fulfill the necessary conditions. However, it is up to individual countries to calibrate their path towards the euro and no timetable is prescribed.”
The Member States that joined the EU in 2004, 2007 and 2013, after the euro was launched, 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.
So it is clear that:
- To use the euro you have to meet the necessary conditions set by the EU and Scotland would not do so immediately on independence
- Scotland would be empowered by the EU to decide the timetable to meet the conditions and as quoted, no timetable is prescribed – in other words, we could be on an indefinite path to adoption.
- Some EU nations were told on joining that they did not yet qualify to use the euro.
Other EU members that are not using the Euro
- Croatia joined the EU in 2013 – On January 1, 2023, Croatia will become the 20th country to use the euro, ten years after becoming a member. It will join Schengen the same day.
- Bulgaria joined the EU in 2007 – Bulgaria’s coalition government plans to switch in 2024, 15 years after becoming a member
- The Czech Republic joined the EU in 2004 – it has no plans to join the euro
- Denmark joined the EU in 1973 – the Danish Government has fixed its currency to the euro. It shares its currency with Greenland and the Faroes
- Hungary joined the EU in 2004 – Its semi-dictator leader Victor Orban has many issues with the EU – but the country is currently exploring joining the euro waiting room (ERM) as a way to stabilise their fluctuating currency.
- Poland joined the EU in 2004 – whether or not to join the euro is a subject of lively political debate. The country is unlikely to join any time soon.
- Romania joined the EU in 2007 – their target year to join the euro is 2024 – but they won’t be allowed to if they don’t meet the criteria.
- Sweden joined the EU in 1995 – Sweden held a referendum in the early 2000s on euro membership, and the country rejected it. Sweden is obliged by treaty to join, as are other newer members but they have just said no. Swedes have a positive view of the EU; but most still don’t want to join the euro.
When an independent Scotland joins the EU as a full member state the EU will agree that it is not possible for Scotland to adopt the euro immediately and will give the Scottish Government full control over the timescales to meet the criteria.
The Scottish Government would therefore be able to indefinitely postpone joining the euro. However, it is technically possible (however unlikely) a future Scottish Government might decide to join the Euro voluntarily – the point is that such decisions are able to be made by a sovereign independent country. As the report “Building a Stronger Economy” points out, even now, far more of Scotland’s manufactured exports go to the Eurozone than to the UK.
These issues will no doubt produce political debate in the decades after Scotland has achieved its independence from the failing UK.