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 British Finance Minister George Osborne, striking an
unprecedentedly blunt tone as the September referendum approaches,
said a break with the United Kingdom would cost Scots dearly in
commerce and finance. Scottish nationalists accused him of bullying
and said his words would backfire.
"If Scotland walks away from the UK, it walks away from the UK
pound," he told a group of about 200 business leaders in a hotel
penthouse with a panoramic view over the Scottish capital,
Edinburgh.
Refusing to be drawn on whether his toughened stance would
antagonize some Scots, he said the Scottish people needed to be
clear on the facts before making their biggest decision in over
three centuries.
"The pound isn't an asset to be divided up between two countries
after a break up as if it were a CD collection," Osborne, Prime
Minister David Cameron's closest ally, said.
Scotland votes in a yes/no referendum on independence on September
18. The vote is open to about 4 million of Scotland's 5.3 million
residents aged over 16 with opinion polls showing the nationalists
trailing but the gap starting to narrow.
With more uncertainty over the outcome in September the debate has
accelerated and Osborne's speech came after Cameron last week made
the patriotic case for unity which was described as a "love-bombing"
by commentators.
But the 42-year-old architect of Britain's drive to reduce spending
delivered a much harsher message to Scots: If you leave the UK, you
will lose the pound and pay higher rates of interest.
"There is no legal reason why the rest of the UK would need to share
its currency with Scotland," Osborne said, having coordinated his
hardened line with Britain's two other main political parties.
His message will be reiterated in future days by Labour's finance
chief Ed Balls and the Liberal Democrat Danny Alexander.
Osborne stressed that this unified approach by Westminster meant
that a currency union was off the table, whoever held power after
Britain's 2015 general election.
CURRENCY WAR?
By honing in on Scottish nationalist hopes of keeping the pound,
London politicians hope to undermine their economic case for
independence. Pro-independence campaigners portrayed his remarks as
an act of panic.
"We've gone in under a week from David Cameron's 'love-bombing' to
attempted bullying and intimidation — from a charm offensive to just
plain offensive," Scotland's Deputy First Minister Nicola Sturgeon
said.
"This is a panic move which will backfire spectacularly. People
won't take kindly to the Westminster establishment ganging up to try
and bully Scotland in the decision that we are being asked to take
on the referendum," she said.
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Whether the move would sway some of the 20 percent or so of voters
still undecided in opinion polls was to be seen.
"For some people this stance on the currency gives clarity but for
others it could be seen as antagonistic," said Alex Sanderson, who
works in a professional services company in Edinburgh and intends to
vote against independence.
Sturgeon indicated that if London prevented a currency union, an
independent Scotland could refuse to take on a share of the UK's 1.2
trillion pounds ($1.99 trillion) of government debt which Britain
has promised to honor.
"Osborne's position is also a bluff," she said. "It would leave them
having to pick up the entirety of UK debt."
Osborne said the nationalist threat to walk away from its share of
UK debt would mean punitively high interest rates for an independent
Scotland and was an "empty threat".
"In that scenario, international lenders would look at Scotland and
see a fledgling country whose only credit history was one gigantic
default," Osborne said.
Nationalists in Scotland, whose waters contain the European Union's
biggest reserves of oil and gas, say they want the Bank of England
to remain the lender of last resort for financial institutions after
possible independence.
Bank of England chief Mark Carney cautioned last month that any
currency union would entail a surrender of some sovereignty and
nationalists have refused to say what they would do if they failed
to get a currency union.
One possible option would be for an independent Scotland to continue
to use the pound in a similar way that Ecuador uses the U.S. dollar
ahead of a possible entry into the European single currency, the
euro, at some later date.
Carney has refused to speculate on the risks of Scotland using the
pound without a formal currency union. Scotland's First Minister
Alex Salmond has said that despite the rhetoric before the vote,
London might be willing to do a deal on the currency if Scots voted
for independence. ($1 = 0.6030 British pounds)
(Additional reporting by William Schomberg, Ana Nicolaci da Costa
and Michael Holden in London; writing by Guy Faulconbridge and
Andrew Osborn; editing by Ralph Boulton)
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