In the Guardian, Patrick Wintour and Severin Carrell cover the latest provocative notion coming out of London, directed at the Scottish separatists:
An independent Scotland would be forced to adopt new currency arrangements that would be a “very deep dive into uncharted waters”, George Osborne has warned. The chancellor said an independent Scotland would be unable to operate with a currency linked to sterling, let alone be able to form a currency union with it.
“The best arrangement is if they stay in the UK,” he said.
Osborne said he thought it “unlikely” the rest of UK would agree to a currency union with Scotland, noticeably hardening his rhetoric against Alex Salmond’s proposal.
Speaking on BBC Radio Scotland, the chancellor said: “Why would it want to risk a currency union? We’ve got a currency union in Europe and it’s called the euro, and look at all the problems that has had trying to co-ordinate the economic policies of different countries.”
Setting out the options, the chancellor said: “I think Scotland could either join the euro, and Alex Salmond is very nervous of saying that, or Scotland can set up its own currency. That is what lots of countries do, but Alex Salmond is again nervous of saying that.
“They can use the pound without our consent, like Panama uses the American dollar, or they can negotiate with the rest of the UK to form a currency zone. But Britain has had poor experience with things like the ERM [exchange rate mechanism], when it has tried to lock or peg its currency together with other currencies. So it is not clear that it would be in the rest of the UK’s interest to enter into a euro-style currency zone with the rest of Scotland.”
