Delivering a keynote speech in Glasgow, the Chancellor said the UK opened doors for Scottish business across the globe and allowed Scotland to punch above its weight on the world stage, arguing that “Scotland is stronger in the UK, and the UK is stronger with Scotland within it”.
Mr Osborne told the annual dinner of CBI Scotland that the UK Government’s respecting the right of the Scottish Government to hold an independence referendum “should not be misinterpreted as indifference on our part to its outcome”.
He strongly rejected the notion that the positive benefits of the union were “consigned to a glorious past”.
The Chancellor also raised questions about the Scottish Government's proposals on the pound and pointed to the Eurozone crisis, saying: “The very lesson of …it is that you can’t have monetary union without greater fiscal and political integration.”
In a wide-ranging speech, he also reiterated the Government’s economic strategy for the UK as a whole.
Throughout today, Mr Osborne met major business figures in Glasgow, hearing both their views on constitutional questions around the future of the UK and the current challenges facing the economy. He visited Thales, the leading defence contractor, to see their facilities in Glasgow and the world leading technology they manufacture.
Extracts from his speech to the CBI:
ON THE UNION
The UK Government is committed to facilitating the process and helping the SNP deliver its manifesto pledge – and ending the uncertainty that is disruptive for UK and Scottish business alike.
There’s a deal to be done. We’re ready to do it. And we can do it – if the Scottish Government is serious about honouring its election promise to let the Scottish people have their say.
Respect for the right of the Scottish Government to hold an independence referendum should not be misinterpreted as indifference about the outcome.
This Government passionately believes that Scotland is stronger as part of the UK and the UK is stronger with Scotland in it.
Today the advocates of independence argue that Britain’s value to Scotland is spent. That union is no longer in Scotland’s economic interests. And that those who continue to believe in Britain are wallowing in nostalgia.
I want to take this argument head on. I make no apology for sharing all of the instinctive emotional attachment to Scotland’s place within the UK.
Our shared history and culture. Distinct yet intertwined identities. A whole greater than the sum of its individual parts.
And I reject the idea that while Britain has a glorious history, it has little relevance in tackling the challenges and grasping the opportunities of the modern world.
Scotland walks taller and shouts louder as part of the United Kingdom.
ON CURRENCY
A single currency has supported more than three centuries of economic and social integration. How can we foresee what effect abandoning this 300 year-old commitment – or even talk of abandoning it – could have on confidence and prosperity?
After flirting with the Euro and floating other possible arrangements, the Scottish Government’s latest position is that an independent Scotland would seek to enter a formal monetary union within a sterling zone.
But the conundrum of the Eurozone crisis is how difficult it is to combine currency union with full fiscal and political independence.
The members of the Eurozone are now faced with what I’ve described as the “remorseless logic” – the very lesson of the Eurozone crisis – that you can’t have monetary union without greater fiscal and political integration.
Greater fiscal integration – because membership of a monetary union means greater interdependence, not greater independence.
That’s why the eurozone are developing plans to control the fiscal positions of individual member states so that they can avoid the risks of contagion for all members of the union.
Greater political integration – because sharing a currency – and perhaps a central bank – means policies that are consistent not divergent.
Members must be prepared to forgo individual interests and circumstances for the interests of the union as a whole.
So it’s difficult to argue for establishing a monetary union while pursuing fiscal and political separation.
In a world in which a separate, independent Scotland wished to pursue divergent economic policies, what mechanism could there be for the Bank of England to set monetary policy, as it does now, to suit conditions in both Scotland and the rest of the UK?
As Chancellor of the Exchequer, I have seen no such credible mechanisms proposed by those advocating independence. I am not clear they exist.
If the Scottish Government cannot provide answers to these basic questions about Scotland’s currency then the Scottish people are entitled to ask this basic question in return: what path is the Scottish Government leading them down?
We’re better together.
ON THE ECONOMY
The economic outlook remains uncertain but there are some positive signs.
Our economy is healing – jobs are being created, manufacturing and exports have grown as a share of our economy, our trade with the emerging world is soaring, inflation is down, much of the necessary deleveraging in our banking system has been achieved, and the world is once again investing in Britain.
But the scale of the challenge is so great that there are no quick fixes or easy routes to recovery.
Our strategy remains the same one set out at the beginning of this Government.
Fiscal responsibility to show the world that we will deal with our debts and keep interest rates low.
Monetary activism to support demand and spread the benefits of those low interest rates through the economy.
And a far-reaching programme of supply side reform to restore our lost competitiveness and deliver real prosperity for the future instead of the illusion of prosperity built on debt.
Despite strong headwinds that strategy is already delivering results. I am determined that we will go further, deliver more and make our competitive edge even sharper.
That is precisely what the Scottish economy needs in order to deliver prosperity for the Scottish people.
Now I know there are those on both sides who call for a change of course. Some say cut more; others say “no”, spend more. We are pushing for more economic reform and faster delivery..
But nobody is offering a credible or convincing alternative economic strategy. There is no easy path to recovery and prosperity.
We in Britain have to confront our problems head on, be honest about the scale of the challenge, and be consistent in our determination to succeed.
