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Yanis Varoufakis, Greece’s outspoken rock-star former finance minister, has said that a second Scottish independence would be “justified” and all but inevitable if the rest of the UK votes to leave the EU in June’s in-out referendum while Scots vote to remain.
Speaking at in investment conference in Edinburgh on Friday, Mr Varoufakis said that it had been a “great error” in the run-up to the September 2014 independence referendum for the Scottish National Party to argue that an independent Scotland would be economically successful while retaining the pound sterling.
If there is a second independence referendum, it should be fought with the promise of a “Scottish pound” being created.
“England and Wales together are too large to be Scotland’s currency partner and the result would be too lopsided,” he said. “Scotland should be braver if it wants to be independent.”
Varoufakis made the comments on the same day that London Mayor and MP Boris Johnson rejected the idea of another independence referendum if the UK leaves the EU against the will of Scots.
The most high-profile Tory backing the Leave campaign said that Scots had had a “once in a generation vote” in 2014. “I don’t think that’s coming around any time again soon,” he added.
Mr Varoufakis – who was Greece’s finance minister for eight turbulent months in 2015 during which the left-wing Syriza government clashed repeatedly with the EU’s imposed austerity agenda – said that even though the EU was “a failed organisation and a cesspool of anti-democratic forces” the UK should remain a member, both for the UK’s own good and to reform the EU from within.
“If Britain leaves there will be an avalanche of requests for opt-outs from various countries that might make sense individually but that would be catastrophic collectively,” he said.
The economics professor – who famously compared Greece’s creditors to terrorists – warned that Wednesday’s decision by the European Central Bank (ECB) to cut its main interest rate from 0.05 per cent to 0 per cent and to cut its bank deposit rate from minus 0.3 per cent to minus 0.4 per cent would not be enough to make up for the dearth of investment across Europe.
Both the ECB President Mario Draghi and the British government need to do more to stop the disintegration of the EU, which is being torn apart by the contrary forces of deflation in northern Europe and stagflation in the south.
“There is something rotten in our financial kingdom,” Mr Varoufakis told an audience of financiers and asset managers attending the Pensions and Lifetime Savings Association’s annual investment conference.
“We live in deflationary times and unless we grasp what is going on and its causes, only then can we call on our governments to move beyond the state of demise in which we find ourselves.”
He said that the Eurozone had a “twin peaks” problem with €2.1 trillion mountain of idle savings hiding behind a mountain of debt. The result is that there is no interest rate that could be set that would boost investment without destroying savings.
Instead of relying on tweaks to monetary policy, the EU should allow the European Investment Bank to start investing in tech start-ups and renewable energy projects by issuing its own bonds, with the ECB standing by in the secondary market.
“Quantitative easing straight into bonds, going directly into productive areas of the real economy, into technology and the kind of jobs that people want to work longer in is key to stabilising the system and something we could do rather than waiting for the second coming,” he said.
“On both sides of the debate there is a belief that Europe is a constant but the issue is that the EU is disintegrating as we speak and Brexit will only accelerate that and create a vortex in the heart of the continent that Britain cannot escape whether it is in or out.”
“By voting to get out you will give Brussels a bloody nose but you will not escape that vortex. I think we should try to stay together to democratise Europe.”
Mr Varoufakis poured scorn on David Cameron’s recently negotiated agreement to change the relationship between the EU and Britain, calling it “a fudge and an enormous waste of human capital” that would change little.
