FORMER chancellor Alistair Darling has dismissed suggestions from Alex Salmond that an independent Scotland could retain the pound as an “absolutely ludicrous position”.
Mr Darling issued a stark warning that Scotland would have no “control” over its own currency if under independence the country was allowed to retain sterling.
The former chancellor, who has resisted calls to lead the anti-independence campaign, said Scots would be taking a “massive risk” with their economic future if they backed the SNP’s flagship plans for a split with the UK.
Mr Darling warned that the “downsides are immense” with independence and said that Scotland will be plunged into unparalleled economic uncertainty if voters back SNP plans to split from the rest of the UK.
His intervention came as Mr Salmond insisted that “sterling is not owned” by Conservative Chancellor George Osborne, who had refused to say whether an independent Scotland would be allowed to keep the pound.
Scottish Secretary Michael Moore yesterday said that there would not be a “legal problem” with an independent Scotland retaining the pound, but claimed that the move would mean “less influence” over setting interest rates.
He said: “If that is part of the deal that the independence section of the debate wanted – I don’t think there’s a legal problem with that. But you do have to very quickly think about the consequences of who would set interest rates, about what it would mean for your spending plans and your borrowing plans, and routinely when I’ve heard senior nationalists, including the First Minister, asked about this point, they don’t actually get on to that.
“What would be the point in setting yourself up as a foreign country with less influence over that interest rate setting policy than you do at the present time when you’re part of that country.”
The First Minister said that the pound would be a “fully convertible currency” in an independent Scotland. Mr Salmond added: “The UK government can’t stop an independent Scotland using sterling for a number of reasons. One, sterling is not owned by George Osborne. He has been Chancellor for 18 months – sterling has been around for a long time. Bank of England was actually founded by a Scot before the Act of Union as it happens.
“Sterling is a fully convertible currency. You can’t possibly instruct people not to use sterling. I don’t know what George Osborne’s degree was in, but it certainly wasn’t in economics.”
Mr Darling heavily criticised the SNP’s support for an independent Scotland retaining sterling, which he compared to the Central American nation of Panama using the US dollar for its currency.
He said: “Panama uses the dollar, which is obviously the American currency. The difficulty is, though, if Scotland was using the pound in the same circumstances, its interest rates would be fixed by the governor of a bank in what would then be a foreign country.
“It seems to me to be an absolutely ludicrous position to get yourself into, where you have a currency and you don’t actually control monetary policy. Or you could join the euro which I think Alex Salmond knows is as toxic in Scotland as it is in the rest of the United Kingdom.”