LONDON – Escalating the fight against secession, the British government warned Thursday that Scotland would lose the right to continue using the pound as its currency if voters there say yes to a historic referendum on independence this fall.
“The pound isn’t an asset to be divided up between two countries after a breakup as if it were a CD collection,” Chancellor of the Exchequer George Osborne said. “The people of the rest of the U.K. [United Kingdom] wouldn’t accept it, and Parliament wouldn’t pass it. ... If Scotland walks away from the U.K., it walks away from the pound.”
Osborne’s stark warning, delivered in a speech in Edinburgh, the Scottish capital, represented a new willingness by unionists to take a hard line in persuading Scottish voters to shun independence in a September plebiscite. A thumbs-up would end Scotland’s 307-year-old marriage to England and Wales and cause the biggest political shakeup in the British Isles since Ireland split from the British crown nearly a century ago.
Scottish nationalists have insisted that their country, if independent, would retain the pound and other symbols of British identity, such as the monarchy. But Osborne, Britain’s top Treasury official, who had previously hinted at the difficulties of sharing a currency, said he now ruled out such an option.
In a reflection of the high stakes involved, Osborne, a Conservative, was immediately backed by his counterparts in the opposition Labor Party and in the Liberal Democrat party, the junior partner in Britain’s coalition government. The unusual show of unity was intended to put Scots on notice that, no matter which of the parties holds power in London after a general election next year, none will support the use of the pound by Scotland if it secedes.
Advocates of independence dismissed Osborne’s warning as an empty threat, evidence of a panicky effort by opponents to sow fear and bully Scottish voters into voting no.
Nicola Sturgeon, deputy first minister of Scotland’s semiautonomous government and a member of the Scottish National Party, said a currency union would be in the best interests of people on both sides of the border, given the volume of trade across it.
“If there was to be a different currency between England and Scotland, that would cost English businesses hundreds of millions of pounds in transaction costs,” Sturgeon told the BBC. Without Scottish exports of North Sea oil, “it would blow a massive hole in the balance of payments of the U.K.”
Sturgeon predicted that “what the Treasury says now in the heat of the campaign would be very different to what they say after a democratic vote for independence, when common sense would trump the campaign rhetoric.”
Her boss, First Minister Alex Salmond, has played hardball by suggesting that, if Scotland were shut out from the pound, it would renege on its share of the British government’s debts. Critics warn that such a move would doom Scotland’s credibility in global financial markets just as the newborn nation tried to stand on its own.
The shift to a more aggressive tone in the public debate over independence comes as some polls show a narrowing of the gap between the two sides.
Still, with just seven months to go before one of the most momentous votes in British history, the unionist camp remains firmly in the lead. In modern times, no poll has ever shown a majority of Scots in favor of separating from the rest of Britain.
Those campaigning to keep Scotland within the fold have apparently decided it best to appeal to both hearts and minds. In contrast to Osborne’s hard-nosed comments on currency matters, Prime Minister David Cameron pleaded last week with Scots to keep their marriage to the English and Welsh intact, noting their shared history, achievements and values in an emotional speech described by pundits as “love-bombing.”
The British pound is itself an emotive issue. Attachment to it among many Scots, along with the debt crisis afflicting continental Europe, has forced Salmond’s party to ditch its previous flirtation with adopting the euro or establishing a new currency.
Osborne cited the euro as an object lesson in the perils of a currency union, pointing out that Eurozone countries have had to surrender more and more authority to Brussels over their national spending decisions in order to make the single currency work. Likewise, Osborne and others say, Scotland would enjoy a shabby sort of independence if it kept the pound, with its currency controlled by another nation and its fiscal policy constrained.
That argument was bolstered last month by the impartial governor of the Bank of England, Mark Carney, a Canadian, who said that “some ceding of national sovereignty” would be necessary for Scotland to keep the pound.
Osborne brushed off the Scottish National Party’s contention that “common sense” would ultimately lead the British government to continue circulating pounds north of the border if Scotland went its own way.
“Common sense is when you’ve got something that works really well already,” Osborne said. “You don’t throw it away. You don’t replace it with something that won’t work as well. And you certainly don’t embark on a high-risk experiment that may not work at all.”
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