A sterling currency union between an independent Scotland and the rest of the United Kingdom is “incompatible with sovereignty”, Bank of England governor Mark Carney has warned.
His statement – a significant sharpening of his earlier comments on the question – is a significant blow to pro-independence campaigners.
Scottish National Party (SNP) leader Alex Salmond has insisted that a currency union would be accepted by the rest of the UK in the case of a Yes vote, despite the rejection voiced by London politicians.
A “successful” currency union needed free movement of capital, a banking union and common budgetary rules to work, Mr Carney told the Trades Union Congress in Liverpool. “You need tax, revenues and spending flowing across those borders to help equalise, to an extent, some of the inevitable differences.”
His remarks were seized upon by campaigners pushing to save the UK entity.
Yes campaign
British prime minister David Cameron will be joined in Scotland today by Labour leader Ed Miliband and Liberal Democrats leader Nick Clegg to campaign for a No vote.
While the move could backfire, given the unpopularity of English politicians in Scotland, it reflects London’s growing alarm over the possibility that Scotland could opt for independence.
“There is a lot that divides us, but there’s one thing on which we agree passionately: the United Kingdom is better together,” the three leaders said in a joint statement.
Copying Canada’s last-minute plea to Quebec ahead of its vote on independence in 1995, Downing Street is flying the Scottish national flag, the saltire. Mr Miliband, urging English and Welsh towns and cities to do likewise said: “We want to send a very clear message, please stay with us.”
Scottish first minister Alex Salmond, increasingly confident in the face of opinion polls, mocked the intervention led by Mr Cameron, saying the No campaign “has fallen apart”.
The SNP’s Angus Robertson, emphasising the scale of panic evident in Westminster, said Scots would vote “for a real parliament”, not one left “with pocket money”.
Nevertheless, there is a degree of concern within the Yes camp that a guarantee from former Labour prime minister Gordon Brown of extra powers could strike home with undecided voters. The Conservatives, Labour and the Liberal Democrats have previously agreed that Scotland should get more home rule, but had not agreed on its final terms.
The Conservatives say Holyrood should raise 40 per cent of the money Scotland spends in taxes and take a proportionate share of VAT receipts. The Scottish parliament should also have power over many welfare payments.
Home rule
The Lib Dems, who have long favoured home rule, want Holyrood to raise and spend most of its own taxes and be able to borrow on its own terms.
However, rules governing treasury grants – which benefit Scotland currently – should change to a “needs-based” arrangement. Welfare and pensions would remain a UK issue.
Labour is more cautious because of divisions between its Scottish leadership and the leadership in London. Both have been less than favourable to Holyrood, despite the fact that Labour re-established the Scottish parliament in 1999.
Details were announced yesterday by Scottish Labour leader Johann Lamont, Ruth Davidson of the Scottish Conservatives and Willie Rennie of the Scottish Liberal Democrats, but it is clear that Mr Brown is the driving force.
“It’s possible to vote No on September 18th – the patriotic choice – but also say you are voting for change,” said Ms Lamont. “Alex Salmond’s lies and alibis won’t wash in a world where the Scottish parliament has the powers to decide how much tax to raise and how much to spend.”
The latest from TNS has reported that nearly one in five has yet to decide.
