Currency Union 'Not A Possibility'

21 July 2014, 06:44 | Updated: 21 July 2014, 06:45

There will be no currency union "of any kind'' between Scotland and the rest of the UK if the referendum results in a vote for independence, the chair of a Westminster committee insisted.

Ian Davidson, chairman of the Scottish Affairs Committee at the House of Commons, dismissed First Minister Alex Salmond's plan for an independent Scotland to enter into a formal deal to continue using the pound.

The Labour MP said: "The Scottish Government tries to give the impression that a currency union is still a possibility. It is not. This parrot is dead.''

He was speaking as the committee issued a report urging the Scottish Government to publish its "Plan B'' for the key issue as a matter of urgency.

"If Scotland leaves the United Kingdom there will not be a currency union,'' the committee report stated.

"Voters urgently need to be told what the Scottish Government has as a Plan B.''

But a spokesman for the First Minister branded the report "lame'', and insisted the pound is "as much Scotland's as it is England, Wales and Northern Ireland's''.

In their report, the MPs said Chancellor George Osborne, Labour shadow chancellor Ed Balls and Liberal Democrat Chief Secretary to the Treasury Danny Alexander had all been "unequivocal'' when they ruled out a currency union.

"No present or future chancellor or government could depart from this policy without totally destroying their credibility,'' the report added.

The MPs warned ending the existing arrangements would have "far-reaching consequences throughout Scotland'', particularly for the financial services industry which is a key part of Scotland's economy.

The Scottish Government must move quickly to provide information as to how it intends to protect the thousands of jobs dependent upon this vital part of the Scottish economy,'' they insisted.

Leaving the UK would "put the success of the financial services industry in Scotland at significant risk'', the report said, with the MPs adding: "We have already seen evidence that significant Scottish financial services companies are preparing to relocate their headquarters, with the consequent effect on Scottish jobs and the Scottish economy, in the event of separation.''

The report claimed it was "clear that the Scottish Government's case for a currency union owes much more to politics than to economics''.

But it said such a deal "would mean that there would be substantial and ongoing restrictions on the Scottish Government's levels of Government borrowing and debt, and that Scotland would not have control over its own monetary policy''.

The MPs said: "This is a very strange aspiration for the Scottish Government, which states that the most important decisions about the Scottish economy should be taken by the people of Scotland.''

As well as calling on the Scottish Government to publish its "Plan B'' on currency, the committee urged Holyrood ministers to look at the impact of Scotland unilaterally adopting the pound and also explain why a new Scottish currency was not their favoured option given this would provide the ``maximum economic leverage''.

Mr Davidson said: "There will be no currency union between a separate Scotland and the continuing United Kingdom. No currency union of any kind: no ifs, no buts, no fudges, no deals. We have had complete clarity and openness on this from George Osborne, Ed Balls and Danny Alexander: from the leadership of the three main political parties in the United Kingdom. There is no shadow of doubt. All were unequivocal.

"The Scottish Government must now explain how it can keep all its other promises; on defence, jobs, pensions and everything else, while financing them with some kind of new untried currency in an uncertain economic and political environment.

"No-one will be more concerned about this than the financial services sector in Scotland, which is a major part of Scotland's economy, and a major provider of jobs in Scotland.

"If the Scottish Government won't be honest about the economic and financial future of a separate Scotland, I am glad we have been able to put these facts finally into the public domain.''

Mr Salmond's spokesman said: "An independent Scotland will keep the pound - as conceded by the unnamed UK minister caught telling the truth by saying 'of course' there will be a currency union.

"The pound is as much Scotland's as it is England, Wales and Northern Ireland's.

"And the fact a group of anti-independence Westminster MPs feel the need to issue a lame report like this shows just how vulnerable the No campaign have become on this issue.''