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Scottish independence: 'Yes' vote means leaving pound, says Osborne Scottish independence: 'Yes' vote means leaving pound, says Osborne
(about 1 hour later)
UK Chancellor George Osborne has said a vote for Scottish independence would mean walking away from the pound.UK Chancellor George Osborne has said a vote for Scottish independence would mean walking away from the pound.
He said there was "no legal reason" why the rest of the UK would want to share sterling with an independent Scotland. He said there was "no legal reason" why the rest of the UK would want to share sterling with an independent Scotland, as Scottish ministers have proposed.
The Scots government wants Scotland to retain sterling as part of a currency union with the rest of the UK in the event of a referendum "Yes" vote. Mr Osborne was backed by Labour and the Liberal Democrats.
The Scottish government's Nicola Sturgeon said Mr Osborne was trying to frighten and intimidate Scotland. Scottish First Minister Alex Salmond said the Westminster parties were trying to "bully" voters ahead of the 18 September independence referendum.
Ahead of the independence referendum on 18 September, Mr Osborne set out his position during a speech in Edinburgh, as he published the latest UK analysis on the issue. The Scottish government said keeping the pound and the services of the Bank of England as part of a currency union under independence made sense for both Scotland and the rest of the UK.
A new Treasury paper on the currency said: But Mr Osborne - along with Labour shadow chancellor Ed Balls and Lib Dem Chief Secretary to the Treasury Danny Alexander, said they could not recommend such a plan.
In an unusual move, the chancellor also published civil service advice from the Treasury's permanent secretary, Sir Nicholas Macpherson, who added his reasons for opposing a currency union: Speaking in Edinburgh, the chancellor said: "The pound isn't an asset to be divided up between two countries after a break-up like a CD collection.
Liberal Democrat Chief Secretary to the Treasury Danny Alexander supported Mr Osborne's position, along with Labour shadow chancellor Ed Balls.
Mr Osborne said: "The pound isn't an asset to be divided up between two countries after a break-up like a CD collection.
"If Scotland walks away from the UK, it walks away from the UK pound.""If Scotland walks away from the UK, it walks away from the UK pound."
The Chancellor went on: "There's no legal reason why the rest of the UK would need to share its currency with Scotland, as the Treasury's publication today clearly shows. The Chancellor went on: "There's no legal reason why the rest of the UK would need to share its currency with Scotland.
"So when the Nationalists say the pound is as much ours as the rest of the UK's, are they really saying that an independent Scotland could insist that taxpayers in a nation it had just voted to leave had to continue to back the currency of this new, foreign country? "So when the Nationalists say the pound is as much ours as the rest of the UK's, are they really saying that an independent Scotland could insist that taxpayers in a nation it had just voted to leave had to continue to back the currency of this new, foreign country?"
"Had to consider the circumstances of this foreign country when setting their interest rates? Stand behind the banks of this foreign country as a lender of last resort? Or stand behind its foreign government when it needed public spending support? Mr Osborne added: "The UK is growing faster than any other advanced economy in Europe, and within the Union, Scotland is growing faster than the rest."
"That is patently absurd."
The Scottish government's currency union plan would also see the services of the Bank of England retained, if Scotland became independent after the 18 September referendum.
The Chancellor added: "The UK is growing faster than any other advanced economy in Europe, and within the Union, Scotland is growing faster than the rest."
"Nothing could be more damaging to economic security here in Scotland than dividing our United Kingdom.""Nothing could be more damaging to economic security here in Scotland than dividing our United Kingdom."
Scottish Deputy First Minister Ms Sturgeon told the BBC that voters in Scotland would not be fooled by "campaign rhetoric" that aimed to "frighten and intimidate" people. The chancellor's speech came as he published the Treasury's latest currency analysis paper, which said:
She insisted a currency union between an independent Scotland and the rest of the UK was in the interests of both parties, adding: "It would be a very odd chancellor of any UK government that insisted on a course of action that cost their own businesses hundreds of millions of pounds, that blew a massive hole in their balance of payments, and of course, because assets and liabilities go hand in hand, would potentially leave the rest of the UK shouldering the entirety of UK debt, which is not something I want to see." And in a highly unusual move, the chancellor also published civil service advice from the Treasury's permanent secretary, Sir Nicholas Macpherson, which stated:
Ms Sturgeon described Mr Osborne's comments as a bluff, adding: "Once Scotland votes to become independent, then we will look at what is in the best interests of Scotland and the rest of the UK. Mr Salmond responded: "This is a concerted bid by a Tory-led Westminster establishment to bully and intimidate - but their efforts to claim ownership of sterling will backfire spectacularly in terms of reaction from the people of Scotland, who know that the pound is as much theirs as it is George Osborne's.
"When I say 'we' I mean a Scottish government and a UK government. "Mr Osborne's claims are based on a caricature of a currency union rather than the reality, and his claims, for example on the size of Scotland's banking sector, do not reflect that reality."
"There are some very strong, practical, hard-headed reasons why continuing to use the same currency is in the interests of people across the rest of the UK." The Scottish first minister added: "The reality is that a formal currency union with a shared sterling area is overwhelmingly in the rest of the UK's economic interests following a 'Yes' vote, and the stance of any UK government will be very different the day after a 'Yes' vote to the campaign rhetoric we are hearing now.
Following Mr Osborne's speech, Mr Alexander said the Treasury had provided "crystal clear" analysis that a currency union would create unacceptable risks both for Scotland and the rest of the United Kingdom. "To do otherwise would involve a prospective Westminster chancellor of any party standing on a platform which was not only vastly at odds with majority public opinion across Scotland and the rest of the UK but would seriously damage the economy of the rest of the UK as it would cost their own businesses hundreds of millions of pounds a year, blow a massive hole in their balance of payments and it would leave them having to pick up the entirety of UK debt."
But Mr Alexander said the Treasury had provided "crystal clear" analysis that a currency union would create unacceptable risks both for Scotland and the rest of the United Kingdom.
He also called on the Scottish government to set out an alternative currency proposal.He also called on the Scottish government to set out an alternative currency proposal.
Mr Alexander added: "As a Scot and as Liberal Democrat Chief Secretary to the UK Treasury, on the basis of this analysis, I couldn't recommend a currency union to the people of Scotland and my party couldn't agree to such a proposition for the rest of the UK.Mr Alexander added: "As a Scot and as Liberal Democrat Chief Secretary to the UK Treasury, on the basis of this analysis, I couldn't recommend a currency union to the people of Scotland and my party couldn't agree to such a proposition for the rest of the UK.
"The SNP continue to pretend that an independent Scotland could continue to share the pound. It couldn't, without agreement.""The SNP continue to pretend that an independent Scotland could continue to share the pound. It couldn't, without agreement."
The Lib Dem MP said: "This isn't bluff, or bullying, it's a statement of fact." The Scottish Lib Dem MP said: "This isn't bluff, or bullying, it's a statement of fact."
Mr Balls, added: "(Scottish First Minister) Alex Salmond is saying to people that you can have independence and keep the pound and the Bank of England - that is not going to happen. Mr Balls, added: "Alex Salmond is saying to people that you can have independence and keep the pound and the Bank of England - that is not going to happen.
"It would be bad for Scotland, it would place an unacceptable burden on the UK taxpayer, it would repeat the mistakes of the euro area, in fact, worse."It would be bad for Scotland, it would place an unacceptable burden on the UK taxpayer, it would repeat the mistakes of the euro area, in fact, worse.
"You'd be trying to negotiate the monetary union as Scotland is pulling away from the UK.
"It won't happen, I wouldn't recommend it. Scotland will not keep the pound if Scotland chooses independence.""It won't happen, I wouldn't recommend it. Scotland will not keep the pound if Scotland chooses independence."
It is understood former Chancellor Alistair Darling, who is leading the Better Together campaign to keep the Union, was instrumental in getting the three Westminster parties to agree a joint currency position.It is understood former Chancellor Alistair Darling, who is leading the Better Together campaign to keep the Union, was instrumental in getting the three Westminster parties to agree a joint currency position.
The referendum will see Scots asked the Yes/No question: "Should Scotland be an independent country?"