The UK local elections in May saw gains for nationalists in Scotland and Northern Ireland, raising the prospect of increased debates over the future make-up of the country. In Scotland, First Minister Nicola Sturgeon, is hoping to hold a second independence referendum in 2023.
The economic context may have deteriorated since 2014 due to Brexit and COVID, but two key issues remain pertinent: Scotland’s choice of currency and whether its public finances would be sustainable. On both subjects, there are some useful lessons that can be drawn from the last secession from the UK, namely that of Ireland in 1922.
Sturgeon has indicated that an independent Scotland would be open to “sharing” the UK pound for a while to help bring stability. Ireland took the same approach until 1928, when it launched its own currency, the punt, pegged one-for-one to the pound sterling, which made sense because Ireland was heavily integrated into the UK economy.
