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UK to Scotland: Forget pound if you walk away
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Britain told Scotland yesterday it would not be able to keep the pound if it voted to end its 307-year-old union with England, declaring that the currency could not be divided up “as if it were a CD collection.”
British Finance Minister George Osborne, striking an unprecedentedly blunt tone as the September referendum approaches, said a break with the United Kingdom would cost Scots dearly in commerce and finance.
Scottish nationalists accused him of bullying and said his words would backfire.
“If Scotland walks away from the UK, it walks away from the UK pound,” he told a group of about 200 business leaders in a hotel penthouse with a panoramic view over the Scottish capital Edinburgh.
Refusing to be drawn on whether his toughened stance would antagonize some Scots, he said the Scottish people needed to be clear on the facts before making their biggest decision in over three centuries.
“The pound isn’t an asset to be divided up between two countries after a break up as if it were a CD collection,” said Osborne.
Scotland votes in a yes/no referendum on independence on September 18. The vote is open to about 4 million of Scotland’s 5.3 million residents aged over 16 with opinion polls showing the nationalists trailing but the gap starting to narrow.
Osborne’s speech came after Prime Minister David Cameron last week made the patriotic case for unity which was described as a “love-bombing” by commentators.
But Osborne delivered a much harsher message to Scots: If you leave the UK, you will lose the pound and pay higher rates of interest.
“There is no legal reason why the rest of the UK would need to share its currency with Scotland,” Osborne said.
His message will be reiterated in future days by Labour’s finance chief Ed Balls and the Liberal Democrat Danny Alexander.
Osborne stressed that this unified approach by Westminster meant that a currency union was off the table, whoever held power after Britain’s 2015 general election.
By honing in on Scottish nationalist hopes of keeping the pound, London politicians hope to undermine their economic case for independence.
Act of panic
Pro-independence campaigners portrayed his remarks as an act of panic.
“We’ve gone in under a week from David Cameron’s ‘love-bombing’ to attempted bullying and intimidation — from a charm offensive to just plain offensive,” Scotland’s Deputy First Minister Nicola Sturgeon said.
“This is a panic move which will backfire spectacularly. People won’t take kindly to the Westminster establishment ganging up to try and bully Scotland in the decision that we are being asked to take on the referendum,” she said.
Osborne said the nationalist threat to walk away from its share of UK debt would mean punitively high interest rates for an independent Scotland and was an “empty threat.”
“In that scenario, international lenders would look at Scotland and see a fledgling country whose only credit history was one gigantic default,” Osborne said.
Nationalists in Scotland, whose waters contain the European Union’s biggest reserves of oil and gas, say they want the Bank of England to remain the lender of last resort for financial institutions after possible independence.
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