EDINBURGH Feb 13 Britain will warn Scotland on
Thursday it can't keep the pound if it votes for independence,
its boldest attempt yet to scuttle a nationalist bid to break
the 307-year-old union with England.
In the latest salvo of a choreographed campaign to keep
Scotland in the UK, George Osborne will seek to play on Scottish
fears of losing the pound to argue that secession would put
Scots' prosperity at risk, pushing them into a tempest of
"The pound is one of the oldest and most successful
currencies in the world," Osborne, Britain's finance minister
and Prime Minister David Cameron's closest ally, will say in a
speech in Edinburgh, according to his office.
"The UK economy is growing faster than any other advanced
economy in Europe. And within the UK, Scotland is growing faster
than the rest," Osborne will say in the speech which is due to
begin at 0900 GMT.
Two sources familiar with the matter said Osborne will tell
Scots they cannot keep the pound if they vote for independence
in the Sept. 18 referendum which will be open to about 4 million
residents of Scotland over the age of 16.
In the speech, entitled "Scotland to keep the pound and the
economic security that it brings", Osborne will echo some of
Cameron's attempt last week to make the emotional and patriotic
case for unity.
But the 42-year-old architect of Britain's drive to reduce
spending will deliver a much harsher message to Scots: Leave the
UK and risk losing the pound you have used for more than three
Osborne's warning will be repeated in future days by the
finance chiefs of Britain's two other main parties: Labour's Ed
Balls and the Liberal Democrat Danny Alexander.
By honing in on Scottish hopes of keeping the pound, London
politicians hope to undermine the economic case for independence
though the leaders of Scotland's bid to breakaway said it
amounted to panicked bullying and would cost London dearly.
"We've gone in under a week from David Cameron's
'love-bombing' to attempted bullying and intimidation - from a
charm offensive to just plain offensive," Scotland's Deputy
First Minister Nicola Sturgeon said.
"This is a panic move which will backfire spectacularly.
People won't take kindly to the Westminster establishment
ganging up to try and bully Scotland in the decision that we are
being asked to take on the referendum," she said.
Sturgeon indicated that if London prevented a currency
union, an independent Scotland could refuse to take on a share
of the UK's 1.2 trillion pounds ($1.99 trillion) of government
debt which Britain has promised to honour.
"Osborne's position is also a bluff," she said. "It would
leave them having to pick up the entirety of UK debt."
Nationalists in Scotland, whose waters contain the European
Union's biggest reserves of oil and gas, say they want the Bank
of England to remain the lender of last resort for financial
institutions after possible independence.
Bank of England chief Mark Carney cautioned last month that
any currency union would entail a surrender of some sovereignty
and nationalists have refused to say what they would do if they
failed to get a currency union.
One possible option would be for an independent Scotland to
continue to use the pound in a similar way that Ecuador uses the
U.S. dollar ahead of a possible entry into the European single
currency, the euro, at some later date.
Carney has refused to speculate on the risks of Scotland
using the pound without a formal currency union. Scotland's
First Minister Alex Salmond has said that despite the rhetoric
before the vote, London might be willing to do a deal on the
currency if Scots voted for independence.
Royal Bank of Scotland, Lloyds Banking Group
and other major financial institutions based in
Edinburgh, have begun contingency planning in case of
independence, Reuters reported on Friday.
Industry sources told Reuters on Tuesday a key part of that
planning is what they will do in the event of a currency union
not being agreed. RBS, Lloyds and Standard Life declined