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Scottish independence: No currency union guarantee

A pensive Alex Salmond and his deputy, Nicola Sturgeon, at Holyrood. Picture: Ian Rutherford

A pensive Alex Salmond and his deputy, Nicola Sturgeon, at Holyrood. Picture: Ian Rutherford

  • by EDDIE BARNES
 

THE Scottish Government has acknowledged it cannot guarantee a sterling currency union with the rest of the UK after independence, as First Minister Alex Salmond’s plans to keep the pound came under mounting pressure.

After fierce exchanges at Holyrood, SNP officials did not dispute this week’s comments by a senior civil servant in the administration, who said the plan for a sterling area across the UK after Scottish independence could not be set out as “fact”.

Speaking at a conference on independence, Colin McKay, head of the SNP government’s strategy unit, said the forthcoming white paper on independence would be able to set out the scheme only as the “best option” the country would have.

Mr Salmond faced attacks from Scottish Labour leader Johann Lamont, who said he had a “brass neck” to claim a deal on a currency union was assured after independence.

There was also increasing pressure on him to set out a “Plan B”, in the event a currency pact with the rest of the UK does not work out.

The latest row comes after Chancellor George Osborne and Scottish Secretary Alistair Carmichael said it was “highly unlikely” the rest of the UK would back such a “eurozone-style currency pact” with Scotland.

But SNP officials insisted the negotiations after a Yes vote pointed towards a formal currency deal with the rest of the UK, saying it would be in both nations’ interests.

The question of a currency deal with the rest of the UK has emerged as perhaps the most important single issue in the referendum campaign, amid evidence that the options of joining the euro or creating a new Scottish currency were a turn-off for swing voters.

Mr Salmond has consistently maintained that “we will retain the pound” after independence, with officials arguing sterling is as much Scotland’s currency as it is the rest of the UK’s. The white paper, due on 26 November, is expected to argue the rest of the UK would want to sign up to such a deal, but it will describe the plan as the policy position of the SNP government, as distinct from a definite guarantee.

Explaining the position at a seminar this week, Mr McKay admitted the SNP government could not state as a fact that a currency union could be achieved, “but we can set out why we think it is the best option”.

Mr Salmond’s aides did not dispute those comments. When asked if a currency pact with the rest of the UK was inevitable, a spokesman said it was the SNP’s “policy position”. He declined to say whether the white paper would provide voters with a currency “Plan B” if the deal was not possible.

Instead, he argued negotiations would end up with such a pact. “It’s in the overwhelming interests of the rest of the UK, if not more than Scotland, to have a currency union and shared sterling area,” he said.

Ms Lamont argued Mr McKay’s remarks were at odds with a statement made in March by a spokesman for the First Minister that “the cast-iron position is an independent Scotland will continue to use the pound”.

She said: “The First Minister’s chief strategist is clear – no cast-iron guarantee can be given. Even in Alex Salmond’s world, it cannot possibly both be true that you can have a cast-iron guarantee and not have one.”

Mr Salmond insisted the plan for a currency union was still Scottish Government policy.

However, UK government official repeated warnings that such a pact was “highly unlikely”, saying there would be no reason for London to want to enter into a “eurozone-style pact”.

A spokesman for the pro-UK Better Together campaign said: “The First Minister should stop demeaning his office and start being straight with people.

“The Chancellor, the shadow chancellor, the First Minister of Wales, countless experts and people within his own campaign think that his currency plan is totally flawed. In Alex Salmond’s world, everyone else is wrong and only he can possibly be right.

“Thankfully, the rest of us – including Alex Salmond’s own strategy chief – live in the real world.”

Scottish Liberal Democrat leader Willie Rennie said: “We must be grateful to this senior Scottish Government official for being frank about Scotland and the pound.”

READ MORE

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George Kerevan: What’s your Plan B, Mr Carmichael?

The Scotsman cartoon: Independence currency plan

The Scotsman Conferences is holding ‘The Independence White Paper: A business plan for Scotland?’ on 3 Dec. Expert speakers will offer objective analysis on the forthcoming white paper in six key business areas.

The full agenda featuring keynote speaker John Swinney MSP has just been published. For more details on this conference and other great events please visit www.scotsmanconferences.com

 

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