Scottish independence: Miliband currency union vow

Labour leaders confirmed Scotland would not be permitted into 'eurozone-style currency union'. Picture: Ian Rutherford
Labour leaders confirmed Scotland would not be permitted into 'eurozone-style currency union'. Picture: Ian Rutherford
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THE Labour Party’s 2015 general election manifesto will include a pledge to block a formal currency union with Scotland if there is a Yes vote in September, leader Ed Miliband has said.

His vow yesterday that vetoing a currency union will become official Labour Party policy ramps up the pressure on Alex Salmond over his plan to enter such a pact with the remainder of the UK after a vote for independence.

A formal currency union is favoured by the Yes campaign but has been already ruled out by the pro-Union parties at Westminster.

Mr Miliband’s manifesto pledge goes further than previous Labour assurances that the party would veto a shared currency. But SNP finance secretary John Swinney said blocking such a deal would impact heavily on firms south of the Border, adding: “No prime minister with any sense will want to block a currency union.”

The latest remarks by the Leader of the Opposition come at the end of a week in which the referendum campaign has been dominated by questions about currency. During a TV debate with Better Together’s leader, Alistair Darling, the First Minister repeatedly refused to outline a “Plan B” alternative to formally sharing sterling.

Last night, both the Tories and the Lib Dems joined Labour in signalling their intention to rule out a shared pound in their 2015 manifestos.

Asked if the Conservative Party would make the pledge part of its general election platform, a senior Tory source said: “Yes, it would. In the unlikely event of a Yes vote, we’d make it crystal clear that a currency union is not going to happen.”

A Lib Dem spokesman said: “A currency union would be in the interests of no-one and we therefore cannot support it. Our position would be unchanged and our manifesto would reflect that.”

Mr Miliband became the first party leader to announce his plans during a press conference in Glasgow yesterday.

He said Labour’s election platform for 2015 would make it “very clear that we’re not going to sign up to a currency union”.

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Asked if it would be guaranteed in the election manifesto, he twice gave an emphatic “Yes”, adding he would “rule it out” if he was elected prime minister.

Nationalist leaders last night dismissed the interventions as “scaremongering” and an attempt to promote the needs of London and the south-east of England above those of Scotland.

Mr Salmond has argued that the pound is as much Scotland’s currency as the UK’s, and that an independent Scotland would have as much right to use it as the rest of the UK.

But he has repeatedly declined to outline his Plan B or say whether a future Scotland would operate a “Panama-style” arrangement, in which Scotland would continue to use the pound unofficially, launch its own currency or join the euro.

At First Minister’s Questions on Thursday, Mr Salmond insisted the unionist parties would abandon their position if it meant an independent Scotland refused to shoulder a £120 billion share of UK debt, a move that could leave the rest of the UK facing a cost of £5bn a year to service that debt.

But Mr Miliband now appears to have hardened his party’s position. He warned that other nations would be “deeply worried” by Mr Salmond’s threat that an independent Scotland would default on its debt if it was prevented from entering a formal sterling zone.

He also said the First Minister had struggled during the STV debate with Mr Darling because he did not have any “good answers” on what the SNP’s alternative plan for currency would be in an independent Scotland.

Mr Miliband went on: “I’ve made it clear that I’m not going to sign up to a currency union that’s not in the interests of the UK. I’ve said I would rule it out.

“Forty per cent of the UK’s trade is with the euro area and 10 per cent of the rest of the UK’s trade is with Scotland. We’re not about to join the euro because it’s 40 per cent, so therefore you have got to make a judgment about whether the currency union makes sense.”

The Labour leader added it was a “sign of desperation” that Mr Salmond was now threatening to default on Scotland’s share of UK debt.

However, Mr Swinney said: “Mr Miliband would have to say to the rest of the UK, ‘Look, we are going to put a barrier up between Scotland for your trade, which would increase the cost of business in the rest of the UK by £500 million or more’.

“He’d also have to say, ‘We’re going to undermine sterling by rejecting the contribution made by oil and gas and whisky into a sterling area’.

“And he’d have to say, ‘We’re also going to absolve the Scots of a £120bn share of the UK debt, which translates into an annual cost of £5bn simply because we won’t agree to a currency union’.

“This demonstrates how ridiculous the position of the No campaign is – and exactly why there will be a currency union.

“The fact is, a currency union is in the interests of both Scotland and the rest of the UK – that is why the experts in the fiscal commission proposed it, and that is why we support it.

“It’s Scotland’s pound, and we are keeping it.”

SNP Treasury spokesman Stewart Hosie said: “The No campaign’s scaremongering on the pound is crumbling.”

He said Mr Miliband had “exposed the fundamental flaw in the No campaign’s argument, which is that they cannot say no to continuing to share our pound without saying that they would make voters in the rest of the UK pay debts that would otherwise be paid by an independent Scotland”.

He added: “I’m not hearing Ed Miliband or anyone else making that statement in London.”