UK government: Independent Scotland can’t both rejoin the EU and keep the pound


The United Kingdom's second capital, Edinburgh. [Shutterstock]

An independent Scotland could not rejoin the EU if it used the pound informally, a senior British minister will say on Tuesday (9 September), according to a former top EU official. Scotland’s historic independence referendum is less than three weeks away.

In a move to persuade Scots to spurn independence, Danny Alexander, the second-most senior figure in the British 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 UK on 18 September 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 coming referendum, a YouGov poll on Tuesday (2 September) showed the anti-independence camp’s lead had shrunk to 6 percentage points from 22 only 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. This was rejected by Britain’s three main political parties.

The ‘Yes side’ 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 the letter.

Scotland and the UK signed an agreement on 15 October 2012 opening the way for a referendum on independence in the autumn 2014.

Scotland has been a nation within the United Kingdom since the UK was founded in 1707. The current Scottish Parliament was founded in 1999 as part of the process of devolution within the UK, which created regional assemblies in Scotland, Wales and Northern Ireland, to give the regions greater autonomy. The Scottish Parliament has control over some parts of policy, such as education and health, and can create its own laws on these issues.

The Scottish National Party (SNP), which leads the devolved government, is campaigning for Scottish independence. The SNP claims that Scotland needs a stronger voice in Europe and beyond to properly represent its social, political and economic interests.

Scottish ministers complain that issues important to them are often sidelined by London.

  • 18 Sept. 2014: Scottish independence referendum

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