Westminster parties unite against currency union

Sterling

The Conservatives, Labour and the Liberal Democrats will declare tomorrow that whoever forms the next UK government will not agree to allow an independent Scotland to use the pound, the BBC has learned.

The chancellor, shadow chancellor and the chief secretary to the Treasury will all set out their views after the publication of an official Treasury report which examines the future of the pound if the people of Scotland vote for independence in this September's referendum.

Sources say the Treasury review - which has been written by government officials, not by politicians - will argue that three conditions would be necessary for an independent Scotland and the rest of the UK to use the same currency. The governments in London and Edinburgh would have to agree to:

  • Underwrite each others banks
  • Allow taxpayers in one country to subsidise the other
  • Reach broad agreements on tax, spending and borrowing levels on both sides of the border.

The Treasury review will not argue for or against so-called "currency union", but in a speech in Edinburgh the chancellor will warn that such arrangements would be unacceptable both for Scotland and the rest of the UK.

His speech is expected to be followed by similar comments from both Labour's Ed Balls and Liberal Democrat Danny Alexander.

The Scottish government has published its own currency review which considered these issues. The SNP's Alex Salmond insists that a deal to use the pound could be agreed after independence and that the anti-independence parties are bullying Scottish voters by making these threats.

A source told the BBC that the three rival Westminster parties were working together to end any doubt that after the next UK general election one or other of them might do a deal to let an independent Scotland use the pound.