September 2, 2014 / 5:10 PM / 3 years ago

An independent Scotland couldn't rejoin EU if it kept pound -British minister

LONDON, Sept 2 (Reuters) - An independent Scotland could not rejoin the European Union if it used the pound informally, a senior British minister will say on Tuesday, citing a former top EU official, less than three weeks before a historic breakaway referendum.

In a move he hopes will persuade Scots to spurn independence, Danny Alexander, the second most senior figure in Britain’s finance ministry and a Scot himself, will cast serious doubt on Scottish nationalists’ plan to keep the pound.

“An independent Scotland would face a simple choice - using the pound like Panama uses the dollar, or joining the EU. It can’t have both,” Alexander, a member of the Liberal Democrats, the junior partner in Britain’s coalition, will say.

“This shows yet again the nationalists failure to put forward a credible currency plan and the dangers it poses to the people of Scotland,” he will tell an audience at the Chatham House think tank in London according to a text released by his office in advance.

Scots vote on whether to end their 307-year union with England and break up the United Kingdom on Sept. 18 with the issue of which currency an independent state would use dominating much of the debate.

After months of opinion polls showing Scots nationalists are heading for defeat in the Sept. 18 referendum, a YouGov poll on Tuesday showed the anti-independence camp’s lead had shrunk to 6 percentage points from 22 a month ago.

The pro-independence side has said it believes what would be left of Britain in the event of a “Yes” vote would agree to a currency union and allow the new state to use the pound, something Britain’s three main political parties have rejected.

It has held out the possibility that an independent Scotland could informally use the pound if a currency union didn’t happen, however, an arrangement that would be known as “sterlingisation”.

Another option would be to have Scotland’s own currency.

Alex Salmond, the leader of the pro-independence Scottish National Party, has also said he wants Scotland to rejoin the EU.

However, Alexander on Tuesday published advice he said he had received from Olli Rehn, the outgoing European Commissioner for Economic and Monetary Affairs, which casts Salmond’s plans into doubt.

“As to the question (of) whether ‘sterlingisation’ were compatible with EU membership, the answer is that this would simply not be possible, since that would obviously imply a situation where the candidate country concerned would not have a monetary authority of its own and thus no necessary instruments of the Economic and Monetary Union,” Rehn said in a letter with Tuesday’s date. (Reporting By Andrew Osborn and Kylie MacLellan; Editing by Andrew Osborn)

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