• Osborne and Alexander disown currency union talk

  
  Ministers respond to claim that UK would have to form currency union to ensure economic stability
  
  
  • Independent Scotland 'may keep pound'
  
  

  Osborne and Alexander try to quash UK-Scotland currency union suggestion

  Chancellor and deputy respond to minister's claim that UK would have to form currency union to ensure economic stability
  • Nicholas Watt, chief political correspondent
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  • theguardian.com, Saturday 29 March 2014 11.57 GMT

  

  Osborne and Alexander spoke out after the Guardian quoted a UK minister on Friday as saying that a currency union would eventually be agreed during lengthy negotiations if Scottish voters supported independence. Photograph: Andy Rain/EPA

  George Osborne and Danny Alexander have tried to quash any suggestion that the UK would agree to form a currency union with an independent Scotland after a minister privately conceded that one would have to be formed to ensure financial and economic stability.
  The chancellor and his Liberal Democrat deputy issued a joint statement to say that a currency union would fail because it would not be in the interests of an independent Scotland or the remainder of the UK.
  Osborne and Alexander said: "There will not be a currency union in the event of independence. The only way to keep the UK pound is to stay in the UK.
  "Walking out of the UK means walking out of the UK pound. A currency union will not work because it would not be in Scotland's interests and would not be in the UK's interests."
  The duo spoke out after the Guardian quoted a UK minister on Friday as saying that a currency union would eventually be agreed during lengthy negotiations if Scottish voters supported independence.
  The minister said: "Of course there would be a currency union. There would be a highly complex set of negotiations after a yes vote, with many moving pieces. The UK wants to keep Trident nuclear weapons at Faslane and the Scottish government wants a currency union – you can see the outlines of a deal."
  The comments forced Osborne and Alexander to put their names to a statement quickly to dismiss the comments by the minister because Westminster does not want to give any quarter to the yes camp.
  The Osborne-Alexander statement was identical, apart from an extra final sentence, to a statement already issued by a No 10 spokesperson on Friday night after the Guardian quoted a minister as saying that a currency union would eventually be agreed to ensure fiscal and economic stability on both sides of the border.
  In the final – and extra – part of their statement on Saturday, Osborne and Alexander reinforced their rejection of a currency union by saying: "Any suggestion to the contrary is wrong."
  The private admission to the Guardian by the minister, which comes after opinion polls showed an increase in support for independence despite the rejection of a currency union by the UK's main political parties, was also seized on by the SNP.
  Nicola Sturgeon, the Scottish deputy first minister, told the Guardian on Friday: "This was supposed to be the no campaign's trump card, but as the polls show it has backfired badly – the gap between yes and no has halved since November, and most Scots simply do not believe the bluff and bluster we had from George Osborne, Ed Balls and Danny Alexander.
  "Now that the card has been withdrawn, it gives an even bigger boost to the yes campaign. And it can only add to the sense of crisis which is engulfing the no campaign."
  But Osborne and Alexander insisted that a currency union would not be agreed. They said: "Scotland would have no control over mortgage rates, and would be binding its hands on tax and funding for vital public services. The Scottish government are proposing to divorce the rest of the UK but want to keep the joint bank account and credit card.
  "The UK would not put its taxpayers at risk of bailing out a foreign country and its banks. Parliament wouldn't pass it, and the people wouldn't accept it. Any suggestion to the contrary is wrong."
  Alex Salmond, the Scottish first minister, dismissed the joint rejection of a currency union last month by the Tories, Lib Dems and Labour as "bluff, bluster and bullying".
  The private remarks by the UK minister are highly sensitive because they come amid nerves on the pro-union side after polls showed Scottish voters do not believe the UK would refuse a currency union with an independent Scotland.
  A Times/YouGov poll found that Scots believe the Westminster parties are lying about their joint rejection of a currency union. The poll, which still put the pro-union camp ahead, found that 45% believe the rejection is a campaigning tactic that would be abandoned after a yes vote.
  The polls are prompting some senior figures at Westminster to look beyond the September referendum to make an assessment of the negotiations that would take place between London and Edinburgh following a yes vote. By the then the currency union would no longer be a weapon in a referendum campaign but a key element in negotiations. London would be hoping to maintain its Trident nuclear fleet at Faslane and Edinburgh would be seeking to ensure economic stability by pressing for a currency union.
  The minister, speaking on condition of anonymity, said: "You simply cannot imagine Westminster abandoning the people of Scotland. Saying no to a currency union is obviously a vital part of the no campaign. But everything would change in the negotiations if there were a yes vote."
  Jackson Carlaw, the deputy leader of the Conservatives in Scotland, highlighted the post-referendum thinking on the pro-union side when he said last month that he would man the barricades after a yes vote to argue for a currency union.
  Carlaw told BBC Scotland's political editor Brian Taylor: "If we vote for independence in September, I'll be manning the barricades with [SNP MSP] Bill Kidd, because I will be a Scot in a country that has decided to vote for independence, and I will be arguing for us to keep the pound."
  The remarks by Carlaw, which he later disowned, highlighted the possible role of Scottish MPs at Westminster after a yes vote. The House of Lords constitution committee, which is examining the post-independence negotiations, has heard that Scottish MPs would by then owe their loyalty to voters in constituencies that would be about to be a foreign country.
  Stephen Tierney, professor of constitutional theory at Edinburgh University, told the committee that it would be "intuitively not correct" for Scottish MPs to be allowed to negotiate on behalf of the UK. This would rule out Danny Alexander of the Lib Dems and Douglas Alexander of Labour – the most senior Scottish MPs at Westminster who would be senior ministers in any cabinet which includes Labour and\or Lib Dem MPs.
  
• copy http://www.theguardian.com