Scotland politics

Scottish independence: Osborne 'bluffing' over currency, says adviser Beveridge

Crawford Beveridge
Crawford Beveridge is on the Fiscal Commission Working Group

The chairman of the Scottish government's council of economic advisers has accused the chancellor of "bluffing" over the currency options an independent Scotland would have.

Crawford Beveridge made the accusation against George Osborne.

The Westminster politicians said it was "unlikely" the rest of the UK could agree to a formal currency union.

But Mr Beveridge, who steered the group behind the plan, said the Treasury was trying to create a "fear factor".

The Fiscal Commission Working Group advises the Scottish government and it has argued that a formal currency union between Scotland and the rest of the UK would be "in the interests of both economies".

In February it published its first report into the "macroeconomic framework" of an independent Scotland.

The currency question has become one of the most contentious of the independence referendum debate.

In an interview with the BBC, Mr Beveridge said that sharing a currency with the rest of the UK would be best because of the high levels of cross-border trade.

He said: "Nobody's said it can't be done and so I am confident that's what we're going to get to."

However, he argued that an independent Scotland could still be successful using the pound outside a monetary union, with its own currency or in the Euro.

Mr Beveridge explained: "If it all blew up then there are at least these three other options we could go and look at very seriously."

But he said the Fiscal Commission had not taken a view on what the second best option would be.

"We've never discussed what's number two on the list. We've just said, let's decide what's number one," he added.

In April, Mr Osborne cast doubt on the possibility of a formal currency union when he revealed Treasury analysis which concluded that the economic case for the rest of the UK agreeing to the union was "not clear".

At the time he said: "It's unlikely that the rest of the United Kingdom could agree to, or we could make work, a euro style currency zone with Scotland."

'Fear factors'

Asked if he thought the chancellor was bluffing, Mr Beveridge said: "Yes, because he's part of a party that does not want to be known for being the party in power when the UK was broken up.

"He, like the rest of his colleagues down there, are doing what I would do, which is to put as many fear factors into the environment as I possibly could."

Mr Beveridge has had a high-flying career in the microelectronics industry and is a former chief executive of Scottish Enterprise.

George Osborne has been accused of "bluffing" over the currency options for independence

He has called on the UK government to enter technical negotiations with the Scottish government on currency arrangements in advance of the referendum.

A Treasury spokesman said the Holyrood administration had failed to provide answers to "crucial questions".

He added: "The UK government's paper on currency and monetary policy was an evidence-based analysis, setting out the options that would face an independent Scotland.

"The Fiscal Commission want Scotland to keep the pound; the best way to ensure this is for Scotland to remain inside the United Kingdom.

"Our paper did not ignore the proposal for a formal currency union. On the contrary, it examined the merits of such an arrangement and found it to be a second-best option for both Scotland, and the whole of the UK."

The spokesman went on: "Both the UK and Scottish governments have also been clear that there should be no pre-negotiation of the terms of independence before the Scottish people have had their say in a referendum."

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