POLITICAL and economic union is the price to pay for sticking with the pound, George Osborne argues in a major UK government attack on the SNP’s plans for independence.
In a joint article with Chief Secretary to the Treasury, Danny Alexander, the Chancellor claims that pro-independence campaigners are “tying themselves in knots” by calling for independence within a monetary union with the UK.
Osborne’s comments come in advance of a coalition government paper on Tuesday setting out its view on the currency arrangements after a potential “yes” vote to independence.
First Minister Alex Salmond has insisted that while the Bank of England would continue to set interest rates, Scotland would have full “fiscal freedom” in such an arrangement.
But Osborne and Alexander declare: “They [the SNP] know in their heart of hearts that the economic and political union we have across the UK does work. And that a formal currency union can only work with political and economic union.”
They add: “This is one of the big contradictions in their whole economic approach. Campaigning to ‘bring powers home’ with one hand, while giving them away with the other. Calling for ‘full fiscal freedom’ with one breath, but calling for a ‘full fiscal pact’ with the next. It simply doesn’t add up.”
They go on: “We can understand why the proponents of independence wish a separate Scotland to enter into a formal currency union with the rest of the UK. But many of their own experts disagree with them. It is not as simple and straightforward as Scottish Government ministers pretend it is.”
Scotland’s leading economic development body will also enter the row over Scotland’s use of the pound in the event of independence this week by declaring that the UK was likely to place curbs on the freedom of the new country to act as it pleases.
The Scottish Council for Development and Industry concludes in a new paper that London could be expected to limit Scotland’s room for manoeuvre.