Scotland will not be able to use sterling if it votes for independence in September, British chancellor of the exchequer George Osborne has said.
Speaking during an appearance before the House of Commons Scottish affairs committee, Mr Osborne said Scots “deserved straight answers to straight questions”, and insisted there would be “no wriggle- room” on the issue.
The chancellor first issued the warning in February, but Scottish first minister Alex Salmond immediately said it was "bluff, bluster and bullying" that would be reversed if Scots voted Yes to independence on September 18th.
However, Mr Osborne, who accused Mr Salmond of misleading Scots during an increasingly rancorous referendum debate, told MPs: “An independent Scotland would not share the pound with the rest of the UK.”
Panama approach
Scotland could try to continue using sterling in the same way that Panama uses the dollar or Montenegro uses the euro, he said, but he noted that even the Scottish National Party's advisers accepted that was not a long-term solution.
“Scotland is a much bigger economy, a much richer economy, a much more sophisticated economy. The idea that Scotland could adopt the Panama or the Montenegro approach is just not credible, it wouldn’t last. It would be pretty disastrous,” Mr Osborne warned.
Scottish banks, which print their own sterling banknotes, would not be able to do so “unless they had a sterling note” issued by the Bank of England in their vaults to stand behind it.
Rejecting charges of bullying, Mr Osborne said no British government could recommend to its citizens after a Scottish departure that they should be responsible for a country that has left them.
Mr Osborne said Scottish finance minister John Swinney had claimed that Scotland could have complete control over its taxes, spending and interest rates and yet be part of a sterling currency union. “Look at the euro,” said the chancellor.
The top official in the UK treasury, Sir Nicholas Macpherson, has stood by his decision to release publicly his advice to the chancellor that Scotland could not have rights to sterling.
Describing himself as someone who is happier being “a faceless bureaucrat”, Mr Macpherson said publishing his advice – which infuriated Mr Salmond – was “the right thing to do”.
He told MPs it had been “incredibly important” that people “would not be in any doubt” that there had been no disagreement between Mr Osborne and the treasury.
