Scotland politics

Scottish independence: Ian Davidson says currency union plan 'a dead parrot'

banknotes
Image caption The Scottish government argues that a formal currency union would be in the best interests of an independent Scotland and the rest of the UK

The Scottish government's plan to agree a currency union with the rest of the UK after independence is a "dead parrot", a committee of MPs has argued.

The Scottish Affairs Committee said agreeing to a currency union with an independent Scotland would "destroy the credibility" of any future chancellor.

It also said an independent Scotland should instead adopt its own currency.

The Scottish government said the pound was as much Scotland's as it was England's.

The Scottish Affairs Committee is being boycotted by the SNP, and is currently comprised of pro-UK politicians from the three main Westminster parties.

Its chairman, Labour MP Ian Davidson, said: "The Scottish government tries to give the impression that a currency union is still a possibility. It is not. This parrot is dead."

In its report, the committee said Chancellor George Osborne, Labour shadow chancellor Ed Balls and Liberal Democrat Chief Secretary to the Treasury Danny Alexander had all been "unequivocal" when they ruled out a currency union earlier this year.

The report said: "If Scotland leaves the United Kingdom there will not be a currency union. Voters urgently need to be told what the Scottish government has as a Plan B."

It added: "No present or future chancellor or government could depart from this policy without totally destroying their credibility."

The MPs claimed that ending the existing arrangements would have "far-reaching consequences throughout Scotland", particularly for the financial services industry which is a key part of Scotland's economy.

Plan B

The report argued it was "clear that the Scottish government's case for a currency union owes much more to politics than to economics".

But it said such a deal "would mean that there would be substantial and ongoing restrictions on the Scottish government's levels of government borrowing and debt, and that Scotland would not have control over its own monetary policy".

The MPs said: "This is a very strange aspiration for the Scottish government, which states that the most important decisions about the Scottish economy should be taken by the people of Scotland."

They called on the Scottish government to publish its "Plan B" on currency ahead of September's independence referendum.

And the committee urged Holyrood ministers to look at the impact of Scotland unilaterally adopting the pound and also explain why a new Scottish currency was not their favoured option, given this would provide the "maximum economic leverage".

But a spokesman for First Minister Alex Salmond branded the committee's report as "lame", and said the pound was "as much Scotland's as it is England, Wales and Northern Ireland's".

Referring to quotes attributed to an unnamed UK government minister in March, the spokesman said: "An independent Scotland will keep the pound - as conceded by the unnamed UK minister caught telling the truth by saying 'of course' there will be a currency union.

"The pound is as much Scotland's as it is England, Wales and Northern Ireland's.

"And the fact a group of anti-independence Westminster MPs feel the need to issue a lame report like this shows just how vulnerable the No campaign have become on this issue."

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