Speaking in Edinburgh, George Osborne said the rest of the UK has no legal obligation to share its currency with Scotland, adding it Scotland walks away from the UK, it “walks away from the pound.”
Osborne shot down any notion of the UK sharing its currency with an independent Scotland, leaving Scotland’s First Minister Alex Sammond’s plans in tatters.
Osborne said that “people need to know that is not going to happen”.
His comments come as the Treasury published a document by senior officials criticising the Scottish government’s proposals for a currency union.
The idea of a currency union for an independent Scotland has also been criticised by one of the biggest investors in Scotland, BP, as well as former UK Chancellors.
On the subject of oil, Osborne attacked the Scottish government’s argument that valuable exports would make a currency union attractive to the rest of the UK.
“If Scottish oil did make such a substantial contribution to the UK’s balance of payments, then it would be artificially increasing the value of the pound – and that would be to the detriment of exporters in other parts of the UK.”
In January, Bank of England governor Mark Carney said an independent Scotland would have to give up some sovereignty if it wished to remain in a sterling currency union.
Following Osborne’s speech, the Liberal Democrat chief secretary to the Treasury Danny Alexander stated his party will also oppose a currency union.
On Wednesday, Shadow Chancellor Ed Balls had also told LBC Radio the prospect of a currency union posed a “fundamental intellectual problem” for Salmond.
The pro-independence Yes Scotland website hit back this morning. It cited former Monetary Policy Committee member David Blanchflower’s view that Osborne’s stance was “political posturing rather than economics”.