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Scottish independence: George Osborne to 'rule out currency union' Scottish independence: George Osborne to 'rule out currency union'
(about 9 hours later)
UK Chancellor George Osborne is likely to rule out a formal currency union with an independent Scotland, government sources have told the BBC.UK Chancellor George Osborne is likely to rule out a formal currency union with an independent Scotland, government sources have told the BBC.
It comes after the prime minister said Mr Osborne will set out details of the coalition's position later this week. It came after the prime minister said Mr Osborne would set out details of the coalition's position later this week.
The Scottish government has said it wants to retain the pound if there is a "Yes" vote in referendum. The Scottish government has said it wants to keep pound in a currency union if there is a "Yes" vote in referendum.
A spokesman for Scottish Finance Secretary John Swinney said Westminster was trying to "bully Scotland". The deputy first minister claimed no currency deal would leave Westminster with the entirety of UK debt.
The Scottish government has said a currency union is the "sensible option". Nicola Sturgeon said the position did not bear scrutiny and was a campaign manoeuvre in a bid to "bully Scotland".
'Difficult to justify'
According to BBC political correspondent Tim Reid, if the Treasury was to formally rule out a currency union it would pile huge pressure on Scottish ministers over which currency an independent Scotland would use, ahead of the referendum in September.According to BBC political correspondent Tim Reid, if the Treasury was to formally rule out a currency union it would pile huge pressure on Scottish ministers over which currency an independent Scotland would use, ahead of the referendum in September.
On 18 September, voters in Scotland will be asked the yes/no question: "Should Scotland be an independent country?" On 18 September, voters in Scotland will be asked the Yes/No question: "Should Scotland be an independent country?"
'Sign of panic' Until now, the chancellor has said a currency union between Scotland and the rest of the UK - in the event of independence - would be "unlikely".
Until now, the chancellor has said a currency union between Scotland and the rest of the UK - in the event of independence -is "unlikely".
Answering questions at a Downing Street news conference on Tuesday, David Cameron said: ''I think it would be very difficult to justify a currency union post-independence."Answering questions at a Downing Street news conference on Tuesday, David Cameron said: ''I think it would be very difficult to justify a currency union post-independence."
A spokesman for Mr Swinney said: "This is nothing more than an attempt by the Westminster establishment to bully Scotland, now that they have started to lose the argument on independence. Ms Sturgeon told BBC Radio's Good Morning Scotland programme that, in the space of a week, the Westminster establishment had gone from David Cameron's "love bombing" back to "bullying and intimidation".
"It is a sign of panic that will backfire badly. She said: "It is a bluff, because if this was to be the position of the Westminster government then it would put them in a position that's at odds with majority public opinion in Scotland, it would put them at odds with majority public opinion in England.
"No one will credibly believe these threats. They are simply another instalment in Project Fear." "It would cost their own businesses hundreds of millions of pounds, it would blow a massive hole in their balance of payments and it would leave them having to pick up the entirety of UK debt."
He added: "People know that the Westminster establishment will say one thing before the referendum but behave far more rationally after a yes vote, when its self-interest will lie in agreeing a currency union with Scotland." The Scottish government has said Scotland should meet a fair share of the cost of servicing UK Treasury debt, but that "assets and liabilities" go together.
Ms Sturgeon said that no matter what Westminster said now, the reality would be very different if Scotland voted "Yes".
Meanwhile, MPs are due to discuss the issue of what currency Scotland would use if voters back independence on Wednesday.Meanwhile, MPs are due to discuss the issue of what currency Scotland would use if voters back independence on Wednesday.
Shadow business minister Ian Murray will lead a debate on the subject at Westminster.Shadow business minister Ian Murray will lead a debate on the subject at Westminster.