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Chancellor to rule out currency union

Article By: ,  Financial Analyst
February 12, 2014 9:45 AM

Chancellor George Osborne is expected to rule out a currency union with Scotland in the event of the country voting for independence later in the year.

The referendum is set to take place on September 18th, but the Yes campaign has previously argued it would continue to use the pound if Scotland breaks away from the rest of the UK.

But deputy first minister Nicola Sturgeon has criticised the Treasury's move and labelled it an attempt to "bully Scotland" ahead of the vote, with the Conservatives and the Labour Party both keen for Scotland to stay in the union.

Ms Sturgeon told BBC Radio's Good Morning Scotland programme that the government has gone from prime minister David Cameron's "love bombing" back to "bullying and intimidation" in the space of just a week.

"It is a bluff, because if this was to be the position of the Westminster government then it would put them in a position that's at odds with majority public opinion in Scotland, it would put them at odds with majority public opinion in England," she said.

Cost to businesses

Ms Sturgeon added that not allowing Scotland to continue to use the pound in the event of the country declaring independence would cost businesses in England hundreds of millions of pounds. She said: "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."

The Scottish National Party has long campaigned for an in-out referendum on Scotland's position in the union. Advance surveys indicate that Scotland will choose to remain in the union rather than declare independence when it goes to the polls, but the result is expected to be a close one.

According to BBC political correspondent Tim Reid, Scottish ministers will be under a great amount of pressure if they are blocked from using the currency if Scotland becomes independent following the result of the referendum.

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