An SNP plan to keep the pound if Scotland becomes independent is “utterly economically incoherent” and “one for the birds”, according to shadow chancellor Ed Balls.
“Scotland is not Kosovo,” Mr Balls said, suggesting that Scotland could not unilaterally keep the pound without a political union with England, similar to those countries in the Balkans that adopted the euro without officially joining the eurozone.
Mr Balls, who could be the next chancellor if Labour wins the 2015 general election, spoke out as he campaigned in Dunfermline with Labour by-election candidate Cara Hilton.
The poll is being held because former SNP MSP Bill Walker, who became an independent, resigned his Holyrood seat after being convicted of assaulting his ex-wives.
Mr Balls said Scots should “stay in the UK and vote Labour for jobs and low energy prices”.
He said he was “taken aback” by Scottish Energy Minister Fergus Ewing’s claim that Ed Miliband’s pledge to freeze energy prices could lead to massive pre-emptive price increases, blackouts, corporate insolvencies and cuts in jobs and investment.
The UK Government was strong enough to stand up to the market power of the big energy companies with regulation and a statutory price regime, he argued.
“You’ve got a Labour candidate, Cara Hilton, saying, ‘Vote for me for jobs and low energy prices’,” Mr Balls said. “Or you can vote for the SNP, which is saying, ‘We will give you independence but you’ll lose the pound, your energy prices will go up and jobs and investment will be put at risk’.”
When asked if he would rule out a currency union with Scotland if he became chancellor, Mr Balls said: “The idea of the pound operating as a parallel currency in Scotland is utterly economically incoherent. It would be massively destabilising.
“No financial institution could possibly operate without a proper regulator and lender of last resort backing it. That one is just for the birds. Scotland is not Kosovo.
“If Scotland votes for independence, there is absolutely no guarantee at all that it will be able to keep the pound, whatever Alex Salmond says.
“Could a UK chancellor recommend to the rest of the UK, and would UK voters be willing to go for, a gamble of a euro-style sterling zone?”
Scottish Government-commissioned experts have been tasked with examining the possibility of an energy price freeze in an independent Scotland, although Mr Ewing repeated his belief yesterday that Mr Miliband’s price freeze was “unfeasible”.
Mr Balls said: “If you stay in the UK, we will have tough, long-term regulation and we will keep prices down for customers and businesses, or you can vote for independence and have higher energy prices.”