LONDON – Scotland has been warned.
If it votes to leave the United Kingdom later this year, then the new country walks away from the pound.
That’s the hard-line and potentially game-changing message presented Thursday by U.K. Treasury chief George Osborne, who ruled out a currency union in a speech in the Scottish capital of Edinburgh.
“The pound isn’t an asset to be divided up between the two countries after breakup as if it were a CD collection,” Osborne said. “If Scotland walks away from the U.K., it walks away from the U.K. pound.”
Underscoring the importance of the day, senior leaders for all three major parties took to the airwaves and backed Osborne’s remarks — an unusual show of unity on any issue other than national security.
The pound — also known as sterling — is one of the world’s most-enduring currencies and is one of the main battle-lines in the run-up to September’s referendum.
Though the comments may raise the hackles of many and contrasts with the “love-bombing” approach of Prime Minister David Cameron in his appeal for unity last week, Osborne is gambling that the majority of Scots will move beyond the romantic appeal of independence and focus on more tangible bread-and-butter economic issues.
It also signalled that U.K. leaders were willing to stand and fight for the union on its strengths, and not just on emotion.
Pro-independence leader Alex Salmond reacted angrily to Osborne’s speech, describing the attack on his planned currency union as an effort to bully and intimidate Scottish voters. Being part of a sterling zone has been the centerpiece of the Scottish National Party’s strategy to guarantee a secure, stable transition.
“Their efforts to claim ownership of sterling will backfire spectacularly in terms of reaction from the people of Scotland who know that the pound is as much theirs as it is George Osborne’s,” he said.
Osborne noted the recent experience of the euro to back up his view that a currency union cannot work if there isn’t a high degree of political union. Why, he asked, should the remaining U.K. members — England, Wales and Northern Ireland — shoulder the risk of a currency union should Scotland vote to break away?
Osborne’s remarks signal an intensification of the independence debate. By ruling out the pound, Osborne is hoping that Scotland’s population of around 5 million will ask a series of questions that will tilt the debate against independence and seasoned economists continue to ponder. Such as: What would replace the pound? How would Scotland raise money? What currency will I use for my pint, let alone my mortgage?
There’s no question that Scotland has a welter of resources, such as oil and gas, highly-rated universities and a whisky so wonderful the whole world knows about it. However, aside from the currency issue, there are issues relating to how the country would deal with the loss of billions of pounds handed out by London as well as future oil production levels.
Polls have consistently put support for independence at between 25 per cent and 30 per cent over the past three years, with support for remaining in the union at between 45 per cent and 50 per cent. But the number of undecided voters is significant.