SCOTLAND would not be an equal partner with England in the post-independence currency union envisaged by Alex Salmond, Danny Alexander, Chief Secretary to the Treasury, has suggested.
In an exclusive interview with The Herald ahead of the Liberal Democrats' spring conference in Gateshead, the Highland MP noted Scotland's economy, while very important, only represented "one-tenth" of the UK's overall economy – England's represents eight-tenths – and argued that the European Central Bank took more note of Germany as the biggest player than other smaller economies in the eurozone.
Mr Alexander also made clear that any suggestion by the First Minister and his SNP colleagues that an independent Scotland would retain full fiscal autonomy while handing over control of monetary policy to the Bank of England was misguided.
He said: "Any currency union requires significant fiscal rules in place to be effective... People can't just assume that somehow on the currency front everything just carries on happily as it is and there's no change if Scotland becomes independent.
"If Scotland wishes to remain part of the currency union with the rest of the UK... one of the lessons of the eurozone crisis is that currency unions without fiscal control, without fiscal rules, have serious problems."
Asked if in Mr Salmond's proposed post-independence "sterling zone", Scotland would be an equal partner with England, the Chief Secretary stressed that Scotland's economy was very important and its interests were already taken into account by the Bank of England. He said: "The Scottish economy, in that circumstance, would be a tenth of the size of the rest of the UK; that's an obvious fact. I'm sure if you talk to the European Central Bank, they'd say they weigh the German economy more because of the size and scale, of course they take every bit into account, than..."
Malta? "Yeah, exactly. The currency issue is not something the SNP can just sweep under the carpet and say 'somehow, everything is going to carry on as it is' because it isn't; that's a big area of change if Scotland were to become independent."
Mr Alexander also appeared to confirm that the Coalition had no contingency plans should Scots vote yes to independence. He said: "The prudent thing to do is that our arguments are marshalled so we win."
With the Budget just two weeks away, the Chief Secretary was asked about the Lib-Con trade-off floated by his LibDem colleague Vince Cable, the Business Secretary, whereby the 50p income tax rate is dropped for a new wealth tax on property.
"Any tax changes, which may or may not happen, will be announced by the Chancellor in his Budget speech," he said.
He defended the controversial policy of axing child benefit for higher rate taxpayers as "fair".
The MP for Inverness insisted the LibDems had a "great deal to be proud of" and denied they had been tainted by their association with the Tories.
l Nick Clegg will today urge LibDems to put behind them the rows on tuition fees and NHS reforms in England and move on. In a speech to his party's spring conference, the Deputy Prime Minister will urge delegates to "stop lamenting what might have been and start celebrating what is".
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