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Scotland currency row: Osborne accused of 'scaremongering' Scotland currency row: Osborne accused of 'scaremongering'
(5 months later)
John Swinney, the Scottish finance secretary, has accused George Osborne of using "shock tactics and scaremongering" to defeat the rational case for a currency pact between an independent Scotland and the UK.John Swinney, the Scottish finance secretary, has accused George Osborne of using "shock tactics and scaremongering" to defeat the rational case for a currency pact between an independent Scotland and the UK.
Swinney said the chancellor's warnings that the UK was unlikely to agree to set up a sterling zone with an independent Scotland would damage the wider British economy, rather than help it.Swinney said the chancellor's warnings that the UK was unlikely to agree to set up a sterling zone with an independent Scotland would damage the wider British economy, rather than help it.
He was reacting to stark warnings from Osborne on Tuesday morning in Glasgow, where he unveiled a detailed Treasury critique of Alex Salmond's proposals for Scotland to create a sterling area currency union, with the Bank of England as Scotland's central bank and its bank of last resort.He was reacting to stark warnings from Osborne on Tuesday morning in Glasgow, where he unveiled a detailed Treasury critique of Alex Salmond's proposals for Scotland to create a sterling area currency union, with the Bank of England as Scotland's central bank and its bank of last resort.
The Treasury argues there were a series of economic, political and technical problems with a small foreign country – Scotland – joining in a currency union with a much larger neighbour. That unstable relationship could hurt the UK's economy and weaken sterling overall, it said.The Treasury argues there were a series of economic, political and technical problems with a small foreign country – Scotland – joining in a currency union with a much larger neighbour. That unstable relationship could hurt the UK's economy and weaken sterling overall, it said.
Swinney said forcing Scotland to use its own currency or join the euro by blocking a sterling zone would erect unnecessary trade barriers that would damage UK businesses that trade heavily with Scottish customers.Swinney said forcing Scotland to use its own currency or join the euro by blocking a sterling zone would erect unnecessary trade barriers that would damage UK businesses that trade heavily with Scottish customers.
It would undermine the UK's heavily integrated single market, Swinney told BBC Radio Scotland, in which Scotland's oil wealth contributed £40bn to the UK's balance of payments in 2011 and where Scottish cross-border trade is worth £45bn a year.It would undermine the UK's heavily integrated single market, Swinney told BBC Radio Scotland, in which Scotland's oil wealth contributed £40bn to the UK's balance of payments in 2011 and where Scottish cross-border trade is worth £45bn a year.
"The chancellor's argument fundamentally comes from a very arrogant point of view which suggests somehow [that] the pound is just the property of the rest of the UK. The pound, the Bank of England, is as much in the ownership of Scotland as it's in the ownership of any other part of the UK," he added."The chancellor's argument fundamentally comes from a very arrogant point of view which suggests somehow [that] the pound is just the property of the rest of the UK. The pound, the Bank of England, is as much in the ownership of Scotland as it's in the ownership of any other part of the UK," he added.
There was a compelling case for a currency agreement between both countries, he said. After a yes vote in next year's referendum, arriving at a joint agreement to preserve sterling across the UK would be the most rational decision.There was a compelling case for a currency agreement between both countries, he said. After a yes vote in next year's referendum, arriving at a joint agreement to preserve sterling across the UK would be the most rational decision.
That position had been set out by the Scottish government's independent fiscal commission, which includes the Nobel laureate Joseph Steiglitz and is chaired by the businessman and former Scottish Enterprise chief executive, Crawford Beveridge.That position had been set out by the Scottish government's independent fiscal commission, which includes the Nobel laureate Joseph Steiglitz and is chaired by the businessman and former Scottish Enterprise chief executive, Crawford Beveridge.
"The chancellor is making great play in all of this about the importance of a single market and we accept that point of view, and that's why we're trying to put in place arrangements that will enable companies to operate in a single market environment, but would enable us in Scotland to establish the type of economic conditions that are appropriate for Scotland," the finance secretary said."The chancellor is making great play in all of this about the importance of a single market and we accept that point of view, and that's why we're trying to put in place arrangements that will enable companies to operate in a single market environment, but would enable us in Scotland to establish the type of economic conditions that are appropriate for Scotland," the finance secretary said.
"What the chancellor has done today is set out the pre-referendum stance, the shock tactics and scaremongering that goes on daily."What the chancellor has done today is set out the pre-referendum stance, the shock tactics and scaremongering that goes on daily.
"After the referendum, in the face of a compelling yes vote from the people of Scotland, the Bank of England, the UK government will adopt a fundamentally different attitude because they will need to put in place workable arrangements and we have provided them with those.""After the referendum, in the face of a compelling yes vote from the people of Scotland, the Bank of England, the UK government will adopt a fundamentally different attitude because they will need to put in place workable arrangements and we have provided them with those."
Patrick Harvie, the Scottish Green leader, whose party supports Scottish independence, said both sides were engaged in a "phoney war".Patrick Harvie, the Scottish Green leader, whose party supports Scottish independence, said both sides were engaged in a "phoney war".
He said Scotland should keep an open mind about creating its own currency, with a sterling deal just a short-term measure.He said Scotland should keep an open mind about creating its own currency, with a sterling deal just a short-term measure.
"In the event of a yes vote both sides would need to recognise the mandate given by the people, and settle down to the real negotiations," Harvie said."In the event of a yes vote both sides would need to recognise the mandate given by the people, and settle down to the real negotiations," Harvie said.
"Scotland's hand in those negotiations would be strengthened if we did the groundwork on our own currency so we keep it as a realistic medium-term option."Scotland's hand in those negotiations would be strengthened if we did the groundwork on our own currency so we keep it as a realistic medium-term option.
"Osborne's economic credibility is in tatters and now he's attempting to wage a phoney war by suggesting we're doomed unless we stick with the existing arrangements – arrangements which fail to reflect our needs and aspirations."Osborne's economic credibility is in tatters and now he's attempting to wage a phoney war by suggesting we're doomed unless we stick with the existing arrangements – arrangements which fail to reflect our needs and aspirations.
"If Scotland votes for full control of our own affairs it is reasonable to expect our economic priorities to diverge from the rest of the UK, so we would be wise to keep our currency options open.""If Scotland votes for full control of our own affairs it is reasonable to expect our economic priorities to diverge from the rest of the UK, so we would be wise to keep our currency options open."
But Alistair Darling, the former Labour chancellor and chair of the pro-UK Better Together campaign, said the Treasury was correct to raise the difficulties and complexities of reaching that agreement – in part because Scotland's options of leaving the sterling pact would undermine its credibility.But Alistair Darling, the former Labour chancellor and chair of the pro-UK Better Together campaign, said the Treasury was correct to raise the difficulties and complexities of reaching that agreement – in part because Scotland's options of leaving the sterling pact would undermine its credibility.
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