March 29 (Bloomberg) -- Scotland can only retain the pound by staying in the U.K., Chancellor of the Exchequer George Osborne said, rejecting a report in the Guardian that a currency union would be agreed.
“There will not be a currency union in the event of independence,” Osborne, a Conservative, said in a joint statement today with Chief Secretary to the Treasury Danny Alexander, a Liberal Democrat. “The only way to keep the U.K. pound is to stay in the U.K. Walking out of the U.K. means walking out of the U.K. pound.”
The three main U.K. political parties have all ruled out sharing the pound with an independent Scotland, targeting the currency as a weakness in the bid by Scottish First Minister Alex Salmond to end the 307-year-old union. Osborne’s cabinet colleagues Energy Secretary Ed Davey, Home Secretary Theresa May and Defense Secretary Philip Hammond have all sought to emphasize negatives for Scotland if they vote for independence.
Osborne was reiterating comments he made on Feb. 13, when he categorically ruled out a currency union in the event that Scotland votes for independence in a Sept. 18 referendum. The Guardian newspaper today cited an unnamed U.K. government minister as saying a currency union would eventually be agreed between the two nations if a split occurs.
“A currency union will not work because it would not be in Scotland’s interests and would not be in the U.K.’s interests,” Osborne and Alexander said. “Scotland would have no control over mortgage rates, and would be binding its hands on tax and funding for vital public services.”
The government is a coalition between Prime Minister David Cameron’s Conservatives and Nick Clegg’s Liberal Democrats. Opposition Labour Party finance spokesman Ed Balls said Feb. 13 a currency union would be “catastrophic” for both Scotland and the U.K.
Salmond has described Osborne’s stance on monetary union as “bullying” and “bluster.”
A complex set of negotiations would take place if Scotland voted to break from the U.K., and the outlines of a deal may involve the U.K. keeping its nuclear weapons in Faslane, Scotland, with the northern nation retaining the pound, the Guardian reported, citing the minister. The paper said the minister would play a central role in any talks about a break up.
“The Scottish Government are proposing to divorce the rest of the U.K. but want to keep the joint bank account and credit card,” Osborne and Alexander wrote. “The U.K. 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.”
The statement was e-mailed by Cameron’s office.
An independent Scotland would face higher energy bills to pay for its renewables subsidies, Davey, the energy secretary, said in a March 18 speech. Hammond said on March 15 that separatists were “deluded” if they thought Scotland would keep warship building in local shipyards, and May said a day earlier that passport checks may be needed to cross the border.
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