U.K. Chief Secretary to the Treasury Danny Alexander said an independent Scotland couldn’t join the European Union if it kept the pound.
In a speech in London today, Alexander cited former European Commissioner for Economic and Monetary Affairs Olli Rehn saying in an exchange of letters it would “simply not be possible” for Scotland to retain the pound without a formal agreement with the U.K. if it wanted to join the EU.
“No country has ever joined the EU while using only the currency of another country at the point of accession,” Alexander said, according to remarks released by his office. “This is not only a bonkers idea” imposing costs and risks on Scottish businesses, “it is also incompatible with Scotland’s smooth re-entry into the EU.”
Campaigners to keep the U.K. intact are continuing to focus on Scottish National Party leader Alex Salmond’s refusal to give up the pound as nationalists gain ground with less than three week to go before the independence referendum.
Salmond claimed in an Aug. 25 televised debate that the SNP had three currency options for an independent Scotland if the U.K. persisted in its refusal to let it use the pound, including using the currency without formal permission.
Nobel-prize winning economist Joseph Stiglitz said in an interview last month the U.K. government would drop its opposition if voters in Scotland opt to break away from the U.K.
“As to the question whether ’sterlingisation’ were compatible with EU membership, the answer is that this would simply not be possible, since that would obviously imply a situation where the candidate country concerned would not have a monetary authority of its own and thus no necessary instruments of the EMU,” Rehn said in his letter.