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Scottish independence: George Osborne to 'rule out currency union' Scottish independence: George Osborne to 'rule out currency union'
(about 3 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 came after the prime minister said Mr Osborne would set out details of the coalition's position this week.It came after the prime minister said Mr Osborne would set out details of the coalition's position this week.
The Scottish government wants to keep the pound in a currency union if there is a referendum "Yes" vote.The Scottish government wants to keep the pound in a currency union if there is a referendum "Yes" vote.
The deputy first minister claimed no currency deal would leave Westminster with all the UK debt. SNP ministers said failure to do such a deal could leave the Westminster government with all UK debt.
Nicola Sturgeon said the position did not bear scrutiny and was a campaign manoeuvre in a bid to "bully Scotland". Scottish Deputy First Minister Nicola Sturgeon said the UK government's position did not bear scrutiny and was an attempt to "bully Scotland".
'Difficult to justify' Alistair Darling, leader of the Better Together campaign to keep the Union, accused the Scottish government of making a "reckless threat".
According to BBC political correspondent Tim Reid, if the Treasury were to formally rule out a currency union it would pile huge pressure on Scottish ministers over which currency an independent Scotland would use, before the referendum in September. Ahead of the 18 September independence referendum, the Scottish government has set out a plan to retain the pound and the services of the Bank of England, in the event of a "Yes" vote.
On 18 September, voters in Scotland will be asked the Yes/No question: "Should Scotland be an independent country?" SNP ministers said the position would be in the best interests of Scotland and the rest of the UK.
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, Mr Osborne has said such an agreement would be "unlikely", but a formal ruling out of such a move would pile huge pressure on the Scottish government's currency plan, said BBC political correspondent Tim Reid.
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, Prime Minister David Cameron, said: ''I think it would be very difficult to justify a currency union post-independence."
Ms Sturgeon told BBC Radio's Good Morning Scotland programme that, in the space of a week, the Westminster establishment had gone from Mr Cameron's "love bombing" back to "bullying and intimidation". Ms Sturgeon told BBC Radio's Good Morning Scotland programme the UK government had given its clearest sign yet that it was losing the argument.
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. "We've gone, in under a week, from David Cameron's love bombing, back to bullying and intimidation," 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.
"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.""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."
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. The Scottish government has said Scotland should meet a fair share of the cost of servicing UK Treasury debt, but that "assets and liabilities" went together.
Ms Sturgeon said that no matter what Westminster said now, the reality would be very different if Scotland voted "Yes".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 on Wednesday the issue of what currency Scotland would use if voters back independence. Responding to the comments, Mr Darling said: "The nationalist threat to default on debt if they don't get their way on currency is reckless.
Shadow business minister Ian Murray will lead a debate on the subject at Westminster. "The impact of Alex Salmond's default would be to say to the world that we cannot be trusted to honour our debts. The result would be higher interest rates for Scots on mortgages and credit cards."
The former UK chancellor added: "One thing is certain - the only way to guarantee to keep the UK pound as our currency is to vote to keep Scotland a strong part of the UK."
On 18 September, voters in Scotland will be asked the Yes/No question: "Should Scotland be an independent country?"