London to rule out currency union with independent Scotland

February 12, 2014 12:08 pm


The Royal Bank of Scotland/AFP
The Royal Bank of Scotland/AFP
LONDON, Feb 12 – Britain’s finance minister George Osborne is likely to rule out a formal currency union with Scotland if it votes for independence, the BBC reported on Wednesday, citing government sources.

Pro-independence Scottish First Minister Alex Salmond favours such an arrangement should Scotland vote to leave the United Kingdom in the September 18 referendum.

But the BBC reported that Osborne, who has already said London is unlikely to back the idea, will officially rule it out on Thursday.

Prime Minister David Cameron said on Tuesday that a formal currency union would be “very difficult to justify” and Osborne would have “more to say” on the subject soon.

Salmond’s deputy Nicola Sturgeon accused London of trying to “bully” Scotland into voting for the status quo and warned that an independent Scotland without a currency union would not take on its share of the UK’s ever-expanding debt pile.

“It’s a bluff,” Sturgeon told BBC radio, claiming Osborne’s position would put London at odds with public opinion on both sides of the border.

“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.

“We, Scotland, should continue to use our pound, because it is our pound as much as anybody else’s.”

Asked if she had an alternative plan in case a currency union cannot be agreed, Sturgeon said: “I’m not going to be bullied out of the right position for Scotland and the rest of the UK.”

Salmond and Sturgeon’s pro-independence Scottish National Party has said Scotland will not join the euro — formerly their favourite option.

The SNP also does not want to establish a separate currency, preferring to remain with the Bank of England as the central bank and lender of last resort.

If London says no to such an arrangement post-independence, Scotland could in theory carry on using the pound sterling without having any say in Bank of England monetary policy.

Several countries worldwide have unilaterally adopted foreign currencies, notably the US dollar and the euro.

Bank of England governor Mark Carney said last month that an independent Scotland would have to cede some sovereignty if it wanted to keep the pound, or risk the problems of the eurozone.

He said the difficulties in the eurozone had shown the “clear risks” of having a currency union without firm foundations.

The latest opinion poll in Scotland found 34 percent in favour of independence and 52 percent against. Twelve percent were undecided and two percent said they would not vote.

YouGov polled 1,047 people for The Sun newspaper from February 3-5.


Latest Articles

Most Viewed