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Salmond warns 'George Tax' will cost English firms £500m a year

SHARING the pound would save businesses from the rest of the UK £500million per year, Alex Salmond said, as he mounted a staunch defence of his under-fire currency plan for an independent Scotland.

The First Minister published an "illustrative calculation" suggesting firms south of the border would face high transaction costs if an independent Scotland established a separate currency.

In a speech to supporters, he insisted the UK would agree a formal currency-sharing deal with an independent Scotland because alternatives would be "impossible to sell to English business".

Mr Salmond used an address to members of the pro-independence Business For Scotland group in Aberdeen to hit back at Chancellor George Osborne's warning last week that the UK would not accept the SNP's proposal to share the pound in a currency union if Scots vote Yes.

Mr Osborne dismissed the speech as "empty", while Alistair Darling, the head of the pro-UK Better Together campaign, said Mr Salmond was "arguing about a problem of his own making" by raising the issue of possible transaction costs.

In a further blow to the First Minister, John Cridland, the director general of the CBI, which represents companies across the UK, warned a currency union would be "unstable" and carried "serious economic consequences".

Mr Salmond spoke out four days after the Chancellor - backed by Labour and the Liberal Democrats - ruled out the SNP's plan to forge a monetary union, arguing it was in neither the UK's nor an independent Scotland's interests.

He dismissed Mr Osborne's warning as "not an economic assessment but a campaign tactic".

And highlighting a new Scottish Government analysis, he said UK firms would not accept the extra cost of trading in a new Scottish currency.

He said: "This charge - let's call it the George Tax - would be impossible to sell to English business, to be charged by their own Chancellor for the privilege of exporting goods to Scotland."

The analysis concluded businesses south of the border faced a "potential cost of approximately £500million from not having the same currency".

The Scottish Government also produced figures suggesting the UK Government had exaggerated the size of Scotland's banking sector.

It followed Mr Osborne's claim that the risk of having to bail out Scotland's banks was a key reason for the UK to reject a currency union.

Attacking the Chancellor's views, Mr Salmond claimed his intervention had "boomeranged".

He told supporters: "No one with a semblance of understanding of Scottish history, and indeed the Scottish character, would have made a speech such as the Chancellor delivered last week.

"To be told that we have no rights to assets jointly built up is as insulting as it is demeaning.

"To be told there are things we can't do will certainly elicit a Scottish response that is as resolute as it is uncomfortable to the No campaign - it is 'Yes, we can'.

"It is a sign of how out of touch and arrogant the Westminster establishment have become."

In reply, Mr Osborne said the First Minister was a "man without a plan".

He said: "Detailed analysis and independent advice shows clearly that what is best for Scotland is keeping the stable and durable currency union we have now.

"The only way to do that is to keep the UK together. If Scotland walks away from the UK it walks away from the pound."

Mr Darling said: "Alex Salmond was arguing about a problem of his own making - the problem of transaction costs for business due to changing currency.

"Avoiding extra costs to business and not placing jobs at risk are powerful reasons why we should vote to remain in the UK and keep the pound."

Danny Alexander, Chief Secretary to the Treasury, said: "If you want to keep the pound, and I do, if you want to keep the wider economic benefits we get from being part of a bigger trading economy, then the best thing to do, the positive case, is to keep the UK together."

John Cridland, CBI director-general, said: "Scotland needs a stable currency, within a secure single market, so that Scottish companies have the best chance to grow and create jobs. Staying in an unstable currency union would have serious economic consequences.

"With the three main UK political parties making it clear that keeping the pound after independence is not an option, it is maintaining the Union that offers the stability of Sterling that businesses need."

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