Thu February 13, 2014
U.K. Warns Scotland: Vote To Secede, Lose Common Currency
Originally published on Fri February 14, 2014 5:06 pm
Scotland, as we've told you previously, is voting later this year on breaking away from the U.K.
Scottish First Minister Alex Salmond had said that the new country would retain the pound as its currency and take on a portion of the U.K.'s debt. Britain's message today [Thursday]: Not so fast.
"If Scotland walks away from the U.K., it walks away from the pound," said Chancellor George Osborne. [You can watch his comments here.]
Osborne's remarks were supported by members of all three major parties: the ruling Conservatives and Liberal Democrats, as well as the opposition Labour. The chancellor's comments came after recommendations made by Sir Nicholas Macpherson, the senior civil servant at the Treasury. He said a currency union with an independent Scotland was "fraught with difficulty."
Salmond, Scotland's first minister, supports independence, and he reacted angrily to Osborne's remarks, calling them "bluff, bluster and posturing." And, he said, if there was no deal on the pound, there won't be a deal on the U.K.'s $2.67 trillion debt, either.
"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," he said in a statement. "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."
Osborne's remarks mark a hardening of the anti-independence posture by the U.K.'s politicians. Just last week, Prime Minister David Cameron made a speech in which he urged the rest of the U.K. – England, Wales and Northern Ireland – to tell Scottish voters to reject independence when they vote in September.
"If we lost Scotland, if the U.K. changed, we would rip the rug from under our own reputation," he said. "The plain fact is we matter more in the world together."
It's unclear what a "yes" vote for independence would mean economically. Diageo, the company that owns whisky brands such as Johnnie Walker, says it would make no difference, a comment echoed by the head of Barclays bank. The head of the oil giant BP, however, says independence would create "uncertainties."
Polls show that support for independence is low, but many Scots are still undecided.