Scottish independence: Osborne doubts SNP currency plan

Chancellor George Osborne was speaking to business leaders at the CBI in Scotland

The financial consequences of Scottish independence have not been addressed by the SNP, the chancellor has said.

George Osborne was in Scotland for a speech to business leaders at the CBI.

He said basic questions about Scotland's currency and monetary policy had not been addressed, and that independence would mean higher interest rates for households and businesses.

The SNP said Mr Osborne's "disastrous economic policies" threatened jobs and investment across the country.

Earlier, the chancellor toured the Glasgow factory of defence contractor Thales.

He told the BBC: "I'm here to make a very positive case for the union. My message is that Scotland walks taller and shouts louder as part of the United Kingdom.

"When it comes to the economy, look at how 85,000 jobs in the private sector have been created in Scotland in the past couple of years.

"Look at how a third of the manufacturing jobs in the whole UK have been created in Scotland recently. Scotland benefits from being part of a strong United Kingdom that around the world is seen to have a credible economic policy."

Start Quote

The cast-iron position is that an independent Scotland will keep the pound - a position that Scottish Secretary Michael Moore has agreed with”

End Quote John Swinney's spokesman

He said Scottish independence would have serious financial consequences - such as higher interest rates for households and businesses - which he claimed Scotland's First Minister Alex Salmond and Finance Secretary John Swinney had not addressed.

"Frankly, I think there are a lot of questions that Alex Salmond and John Swinney have not been able to answer about the economic policies of an independent Scotland," he said.

"Why would interest rates not go up? How on earth could a Scottish government be able to issue the kind of guarantees that a UK government can?

"We are able to guarantee infrastructure investment in Scotland, like the rest of the UK.

"On the currency, there are basic questions that Alex Salmond cannot answer about monetary union with the rest of the UK, should Scotland become independent.

"Because the Scottish people are concerned about joining the Euro, he now says he would join the pound sterling area. Before he takes Scotland down this path, he has to answer basic questions about how the pound would operate.

"If he can't answer basic questions about Scotland's currency, then I think the Scottish people are entitled to ask some basic questions about the path he's leading Scotland down."

'Disastrous policies'

A spokesman for Mr Swinney said: "Scotland needs no lessons from a Tory Chancellor whose disastrous economic policies are threatening jobs and investment across this country.

"The uncertainty being caused to Scottish businesses is through Mr Osborne's policies, and his government's failure to invest in capital projects.

"The cast-iron position is that an independent Scotland will keep the pound - a position that Scottish Secretary Michael Moore has agreed with.

"And Scotland urgently needs the powers of an independent country to boost economic recovery and create jobs, and many of the leading job-creators in Scotland agree with us on that."

On Thursday evening, Mr Osborne was also speaking at a CBI Scotland dinner, where he told business leaders the country faced its biggest decision in three centuries.

'Biggest decision'

"300 years of working together means that today the hard-headed economic interests of Scotland and the rest of the UK are inextricably bound up together," he said.

"High levels of investment come from the rest of the UK into Scotland, with UK firms employing one in five Scottish workers and contributing around a quarter of Scottish turnover in 2010.

"Each year Scotland exports around £45bn worth of goods and services to the rest of the UK - equivalent to 40% of Scotland's total output. This is more than twice as much as Scotland exports to the rest of the world put together.

"In a world in which a separate, independent Scotland wished to pursue divergent economic policies, what mechanism could there be for the Bank of England to set monetary policy, as it does now, to suit conditions in both Scotland and the rest of the UK?

"As Chancellor of the Exchequer, I have seen no such credible mechanisms proposed by those advocating independence. I am not clear they exist."

Mr Osborne also said he would be making an announcements about the North Sea tax regime on Friday which "should bring more investment and more jobs" to Scotland.

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