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Sketch: bad cop Gideon takes aim at SNP from a penthouse...in Bread St

After the lovebombing of Scots last week by David Cameron, his chancellor travelled North to revel in his role as bad cop.

The venue for George Osborne's declaration was a dramatic penthouse with a panorama of Edinburgh Castle in the appropriately named Bread Street.

He carried a very large gun to shoot down Alex Salmond's plan to continue sharing the pound with the rest of the UK after independence, but the bullets were crafted by the longstanding Permanent Secretary to the Treasury, Sir Nicholas Macpherson.

George Osborne brought with him the latest Scotland Analysis document, assessment of a sterling currency union. He read out a 19-page speech based on its contents.

But the real killer was a memo running to just over two pages. Mr Osborne said he was taking the "exceptional step" of publishing this internal advice.

Headed "From: Nick Macpherson" and dated Tuesday of this week, the memo to the Chancellor and his Chief Secretary Danny Alexander amounts to a devastating critique of proposals for Scotland to share sterling and the Bank of England.

Drawing on this, the Chancellor could not have been more categorical: "The SNP says that if Scotland becomes independence 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."

Mr Osborne talked about "the pound in your pocket," the phrase coined by Harold Wilson in 1967 as he was forced into devaluation by a crippling national debt of £800m. The UK national debt now stands at £1.16 trillion.

From the airy penthouse, journalists were led down to a cold, barely lit basement for a briefing with the Chancellor and a sight of the Macpherson memo.

"I would advise strongly against a currency union as currently advocated, if Scotland were to vote for independence," it stated.

One reason was that such an arrangement might be viewed as short-term rather than solid and irreversible. Another was the scale of Scotland's banking sector which could leave the UK to picking up the pieces in an future crisis.

Thirdly, he cited the Treasury assertion that fiscal policy between Scotland-rUK would become "increasingly misaligned" in future. He cast doubts on a future Scottish Government being committed to a "rigorous fiscal policy," with tax and spend commitments and "persistently optimistic" oil revenue projections.

He also dismissed as "not credible" Alex Salmond's threat to refuse to take on its share of UK debt because it would damage Scotland's future economic credibility.

"To sum up, I would advise you against entering into a currency union with an independent Scotland. There is no evidence that adequate proposals or policy changes to enable the formation of a currency union could be devised, agreed and implemented by both governments in the foreseeable future."

It may have been a chilly basement, but with that opinion behind him and with the agreement of his Liberal Democrat and Labour counterparts to this "no deal" stance, George Osborne looked very comfortable that he had seen off a central plank of Mr Salmond's strategy.

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