Controversial proposals for an independent Scotland to keep using the pound were dealt a major blow yesterday.
Chancellor George Osborne, backed by Labour counterpart Ed Balls and Liberal Democrat Danny Alexander, said a currency union with the rest of the UK “would not work” and was “not going to happen”.
The Conservative MP claimed it would cost jobs, money and lead to economic insecurity.
But First Minister Alex Salmond argued the UK Government was leading a “concerted bid to bully and intimidate” Scotland and said a shared currency was in the “overwhelming interests” of all concerned.
And last night, SNP Finance Secretary John Swinney claimed the analysis was “incomplete” and had been developed without any discussion with ministers in Edinburgh.
He also argued it did not take on board the independent work of the Fiscal Commission Working Group (FCWG), which provided advice on a banking union, risk sharing, monetary and exchange rate policy and duration of a currency union.
The expert panel has recommended early engagement between the Scottish and UK Government to properly address “gaps” in the chancellor’s analysis.
Despite the protestation, however, it emerged that the UK Treasury’s assessment of sterling currency union paper does draw reference to the SNP Government’s FCWG’s evidence.
Speaking in Edinburgh yesterday, Mr Osborne said a stable currency was the “bedrock of the economy” and the pound represented the value of people’s savings and underpinned jobs, mortgages, pensions, public services and taxes.
He claimed it was “patently absurd” to expect people in the remaining UK to take responsibility for a foreign country.
Mr Osborne said the SNP’s proposal was a “high risk experiment” and the pound was not an asset to be divided up.
“It is a system that is supported by political union, banking union and automatic transfers of public spending across the UK,” he added.
“A vote to leave the UK is also a vote to leave these unions, those transfers and monetary arrangements.
“If Scotland walks away from the UK it walks away from the UK pound.”
Mr Osborne claimed the first minister had resorted to “reckless threats” by suggesting an independent Scotland would not take on a share of UK debts if it could not keep the pound.
The MP said Scotland would start life with a “gigantic default” that would lead to high interest rates which would be crippling to people with mortgages and personal loans.
But Mr Salmond argued the UK Government’s efforts to claim ownership of sterling would “backfire spectacularly”.
The MSP for Aberdeenshire East, claimed voters “would not be fooled by the bluff, bluster and posturing” of the three Westminster MPs.
Mr Salmond said the stance of the UK Government would be very different the day after a Yes vote.
He added that his government believed Scotland should meet a fair share of the costs of national debt but claimed that assets and liabilities “go hand in hand” and sterling and the Bank of England were shared UK assets.
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