You’ve got to love Alex Salmond. He never disappoints. He is the gift that keeps on giving. He is now furiously digging in on the pound. We learn today that an independent Scotland would use the pound even without a currency union, while declining to take on any of the UK debt. – That is, the “Panama option”, so-called because that central Amercian country uses the US dollar unilaterally.
So let’s look at Panama. Its economic output per person (Gross domestic product per capita as of December 2013) is $10,200. On that measure, they are the 58th economically active country in the world after Kazakhstan and Gabon. Yes, that’s Gabon in Africa.
By the same measure, the United Kingdom’s output per person is $38,000, putting it 24th in the world.
So Salmond’s model is now a country, by that broad measure, which is four times less wealthy than the UK.
But never mind, dear Alex will once again turn sense on its head and, no doubt, argue that Panama is a fantastic model to follow: to use the currency of a foreign country with no control over monetary policy and interest rates, and with no access to the central bank as lender of last resort to its financial sector.
There is one great advantage to this Tartan Panama plan. It gets Salmond out of a debating hole for five seconds, until the audience realises that it is completely nuts.