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Osborne: If Scotland walks away from the UK, it walks away from the UK pound

NO British Chancellor, today or in the future, will agree to a currency union with an independent Scotland, George Osborne said during a flying visit to Edinburgh.

Choreographed visually, with the Castle flying a Union flag behind him at The Point hotel, and choreographed politically, with his coalition deputy Danny Alexander and Labour's Ed Balls weighing in, the Chancellor was unequivocal.

He said yesterday: "The SNP says that if Scotland becomes independent there will be a currency union and Scotland will share the pound. People need to know - that is not going to happen. If Scotland walks away from the UK, it walks away from the pound."

First Minister Alex Salmond called this "a concerted bid by a Tory-led Westminster establishment to bully and intimidate" and said this would backfire spectacularly in terms of reaction from the people of Scotland, "who know that the pound is as much theirs as it is George Osborne's.

"All the debt accrued up to the point of independence belongs legally to the Treasury, as they confirmed last month - and Scotland can't default on debt that's not legally ours.

"However, we've always taken the fair and reasonable position that Scotland should meet a fair share of the costs of that debt. But assets and liabilities go hand in hand, and - contrary to the assertions today, sterling and the Bank of England are clearly shared UK assets."

Finance Secretary John Swinney insisted that the Treasury analysis was flawed, calling it "backward-looking" and taking no account of the comprehensive evidence provided by the independent economic experts of the Fiscal Commission.

Mr Swinney said the Fiscal Commission had made clear a currency union would "ensure financial stability and allow both governments autonomy over economic and social policies, including fiscal policy" and noted how Mark Carney, the Governor of the Bank of England, had confirmed the Bank would deliver a currency union if it was agreed by both governments.

But the Chancellor's pitch was based not just on the latest Treasury document and backing from the Liberal Democrats and Labour. It was underpinned by strong advice from his most senior civil servant, Sir Nicholas Macpherson, urging rejection of a sterling zone.

Mr Osborne insisted: "It is clear to me I could not, as Chancellor, recommend that we could share the pound with an independent Scotland.

"The evidence shows that it wouldn't work, it would cost jobs and cost money. It wouldn't provide economic security for Scotland or for the rest of the United Kingdom.

"I don't think any other Chancellor of the Exchequer would come to a different view.''

Mr Balls was forthright in his opposition to a currency union. "Alex Salmond is saying to people that you can have independence and keep the pound and the Bank of England; that is not going to happen," he insisted.

The Shadow Chancellor claimed such a sterling zone would place an unacceptable burden on the UK taxpayer and repeat the mistakes of the euro area. "In fact worse, you'd be trying to negotiate a monetary union as Scotland is pulling away from the UK."

Mr Alexander, for the Liberal Democrats, was equally emphatic. "The SNP continue to pretend that an independent Scotland could continue to share the pound. It couldn't, without agreement. And because a currency union wouldn't work for anyone, it simply isn't going to happen."

The Chief Secretary to the Treasury also rebuffed the SNP charge that the pro Unionist parties were full of bluster and trying to bully Scotland.

The Highland MP added: "This isn't bluff or bullying; it's a statement of fact. The SNP's claims that an independent Scotland could or should be able to share the pound are pure fiction. When we vote in September, no-one in Scotland should vote for independence in the belief that we could keep the pound."

Alistair Darling, for Better Together, urged the First Minister to now come up with "not so much a Plan B but a Plan A".

He asked: "Now that using the pound is off the table, would we be rushing to join the euro or set up an unproven separate currency?"

Ruth Davidson, the Scottish Conservative leader, said there was now "nowhere left to hide" for the Scottish Government, adding: "The SNP has been found out. It should now stop concealing the truth from the people of Scotland and come clean on what the consequences of separation really are. Scotland's already part of a currency union; it's called the United Kingdom."

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