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Agenda: It is for Westminster to produce a Plan B option to currency union

The hysterical reaction to the admission by a Coalition Government minister, to the effect that currency union would be accepted in the event of a Yes vote, shows ministers were bluffing.

They have to stand by that bluff. A currency union is the only hope Westminster governments have of staving off a mountain of economic trouble when we say goodbye. The real question, conspicuous by its absence, is: "Where is your Plan B, Westminster?"

Having "ruled out" currency union, it is Westminster politicians who need to explain how the bankrupt remnant of the British state intends to stay afloat financially in the years ahead. When Scotland becomes independent, and our huge trade surplus and income/transfers are withdrawn from the UK current account, its deficit will break all records, and the rUK economy will be exposed to a deadly truth. It is dangerously weak and mired in massive debt it will find hard to service, never mind repay.

Along with others, I have been afraid that, on independence, Scotland, with only the currency union as a "one-club" policy, would face a Westminster government telling us we had nowhere else to go, and demanding we sign up to the terms it laid down, including significant control over our fiscal policy. The candid comments of the minister and the panicked reaction of his colleagues have been instructive. With a sensible modification to policy, it will, as Westminster clearly realises, be a strong Scotland dictating the terms.

I remain in favour of a separate Scottish currency aligned with sterling. Our positive trade balance, which no one disputes will exist, will bring in foreign currencies to bolster our reserves which, along with the oil and gas factor, will underpin a Scottish currency's strength. But I understand Alex Salmond's position on currency union.

Ultimately, the rUK will be our largest "foreign" market, and it is not in our national interests to beggar that neighbour. Had the First Minister spelt out that side of his concern more clearly, people would recognise a man whose mind is far from that of the little Scotlander and narrow nationalist the No side and their proxies try to portray.

We must recognise that, at independence, Scotland's negotiators have options. It makes sense to widen those options on currency as options can reinforce each other. If we have a Plan B, being a workable separate currency, alongside Plan A, a currency union, we enter negotiations with a very strong hand, especially as the other side can cling only to Mr Salmond's Plan A.

Scotland has bargaining chips and options that England and the rest do not have. The hectoring and bullying tone of recent months has been nothing more than the loud-mouthed bluff of the poker player with a duff hand. The weakness of that hand has been revealed in the unguarded honesty of an off-duty Cabinet member.

The importance of this combination of plans will put Scotland in a strong negotiating stance against a very weak rUK position. We can operate successfully with a separate currency, whereas rUK has nowhere else to go. From that position of strength, we can write the terms of a currency union that reduce the Bank of England's role in Scottish fiscal policy, increase our representation on the Monetary Policy Committee, dictate its remit to take account not only of Scotland but the neglected parts of northern England and minimise the transfer of sovereignty involved in such a union.

That fateful ministerial admission, along with the current account figures underpinning it, will, in retrospect, be seen as the big turning point in this referendum debate. Better Together's assertion that Scotland needs to shelter under a big, strong UK economy has been exposed as a sham. That economy with amongst the highest levels of debt to GDP in Europe, is far from strong. The dangerously imbalanced rUK needs us more than we need it. If it is to have our healthy trade surplus, under a currency union, then that union must be on our terms. What a refreshing change independence will make.

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