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Salmond Says Forcing Scotland to Drop Pound to Hurt U.K.

Pedestrians cross a road near the illuminated clock tower of the Balmoral Hotel, center, on Princes Street in Edinburgh. Photographer: Simon Dawson/Bloomberg
Pedestrians cross a road near the illuminated clock tower of the Balmoral Hotel, center, on Princes Street in Edinburgh. Photographer: Simon Dawson/Bloomberg

Feb. 17 (Bloomberg) -- Scottish First Minister Alex Salmond disputed the argument of U.K. ministers that an independent Scotland would lose the pound, saying businesses in the rest of the U.K. would forbid something that drove up transaction costs.

Salmond was responding to a series of attacks on the independence campaign over the last 10 days, including a speech from Chancellor of the Exchequer George Osborne on Feb. 13 ruling out currency union. European Commission President Jose Barroso said yesterday it would be “extremely difficult, if not impossible” for Scotland to join the European Union.

Opponents of ending the 307-year-old U.K. argue that it carries a series of risks. Salmond responded today that such threats would be abandoned in the event of a “yes” vote in September’s referendum, to be replaced with negotiations based on “enlightened self-interest.”

Denying Scots a currency union “would be impossible to sell to English business, to be charged by their own chancellor for the privilege of exporting goods to Scotland,” Salmond told supporters in Aberdeen, northeast Scotland. “If you remove oil and gas from the equation, Scotland is one of the very few countries in the world with which England has a balance-of-trade surplus.”

‘Democratic Expression’

Salmond also questioned Barroso’s assertion that Scots would struggle to rejoin the EU. “The decision is one for member states, but not to recognize the democratic will of Scotland would run counter to the entire European Union ideal of democratic expression and inclusion,” he said.

Osborne today called Salmond “a man without a plan” and said the first minister had failed to respond in his speech to the economic arguments he’d put forward last week.

“Detailed analysis and independent advice shows clearly that what is best for Scotland is keeping the stable and durable currency union we have now,” the chancellor said in an e-mailed statement. “The only way to do that is to keep the U.K. together.”

The argument over Scotland’s constitutional future is heating up after polls last month showed the first significant movement in support of independence. Salmond’s blueprint for autonomy envisages an independent state on March 24, 2016, with sterling and negotiations with the EU based on the U.K.’s current terms.

Poll Findings

A survey by ICM Research for the Scotland on Sunday newspaper in January found 37 percent of respondents would vote for independence, up five percentage points from a comparable poll in September. Those in favor of staying part of the U.K. dropped to 44 percent from 49 percent.

Since then, Prime Minister David Cameron appealed to people in the rest of the U.K. to persuade Scots not to leave, while Osborne traveled to Edinburgh to make his speech on the pound. Barroso spoke on the BBC’s “Andrew Marr Show.”

Scotland can’t bank on the acceptance of all 28 existing EU member nations, which it would need for membership should its people vote to break away from the U.K., Barroso said.

Senior members of the pro-independence “Yes” campaign will urge Salmond at an advisory meeting in Glasgow today to consider adopting a new currency if Scotland can’t form a currency union with the U.K., the Sunday Herald newspaper reported yesterday, without saying where it got the information.

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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