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A currency union with an independent Scotland is ‘not going to happen’ says Chancellor

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

A currency union in the event of a vote for independence ‘would not be in the interests of either the people of Scotland or the remaining UK’, says Chancellor.

A currency union in the event of a vote for independence ‘would not be in the interests of either the people of Scotland or the remaining UK’ Chancellor of the Exchequer George Osborne said in a speech in Edinburgh today.

It follows official Treasury advice that in the event of independence they would not recommend a currency union to the Government of the continuing UK.

The Chancellor has also published the advice he received from the Treasury Permanent Secretary on whether to join a currency union should Scotland become independent.

The Chancellor said:

I hope passionately that the people of Scotland choose to stay within our family of nations in the United Kingdom. I want Scotland to keep the pound and the economic security that it brings.

But it is clear to me I could not as Chancellor recommend that we could share the pound with an independent Scotland.

The evidence shows it wouldn’t work. It would cost jobs and cost money and wouldn’t provide economic security for Scotland or for the rest of the UK.

I don’t think any other Chancellor of the Exchequer would come to a different view.

The Scottish government says that if Scotland becomes independent there will be a currency union and Scotland will share the pound.

People need to know – that is not going to happen.

The Treasury also today published the detailed analysis on the economics of a currency union which underpins its advice to the Chancellor.

The paper states that while the United Kingdom is one of the most successful monetary, fiscal and political unions in history, the fiscal and financial risks of entering into a currency union with a separate Scottish state would be too great.

The analysis states:

UK is a successful union because taxation, spending, monetary policy and financial stability policy are co-ordinated across the whole UK, with risks pooled and clear political accountability

  • Scotland’s economy would be more exposed in the event of independence, with greater risks from shocks in the financial and energy sectors
  • in a currency union, the continuing UK would be exposed to much greater risk from a separate Scotland, with the possibility of continuing UK taxpayers being asked to support that state in the event of a fiscal or financial shock
  • if people in Scotland vote for independence, the Treasury would advise the continuing UK Government against entering into a currency union with an independent Scotland