August 9, 2014 / 11:05 PM / 3 years ago

Pro-union campaign says sterling not in independent Scotland's interests

EDINBURGH (Reuters) - A formal currency union would not be in the interests of an independent Scotland, the leader of the campaign to keep the United Kingdom together has said, stepping up pressure on nationalist plans to keep the pound.

With just over five weeks to go until the Sept. 18 independence referendum, uncertainty over what currency would be used if Scotland leaves the United Kingdom after 307 years of union with England remains a major campaign issue.

Britain’s three main political parties have ruled out a formal currency union, but Scottish nationalist leader Alex Salmond has said he is confident a deal would be done and that Scotland “cannot be stopped from keeping the pound”.

However, Alistair Darling, a former Labour finance minister who heads up the “Better Together” campaign to reject independence, again ruled out a formal union.

“It’s quite clear that there’s not going to be a currency union. It’s not in Scotland’s interest, it’s not in the interests of the rest of the UK, so with five weeks to go we need to know what plan B is,” Darling told reporters during a briefing which was embargoed until Sunday.

The comments come as he seeks to capitalize on his unexpectedly strong performance in a televised debate last Tuesday. Polls showed that Darling won the clash against Salmond, which was largely dominated by the issue of currency.

A survey by pollsters Survation published on Saturday in the Scottish Daily Mail said 50 percent of respondents planned to vote against independence next month, with just 37 percent supporting a split and 13 percent undecided.

The chief executive of Survation, Damian Lowe, told Reuters the ‘yes’ campaign would need to see a “seismic change” in order to win, and had to answer key questions, particularly over which currency an independent Scotland would use.

PLAN B

Pressure has been growing on Salmond to detail his preferred back-up option should a formal currency union not be available.

But in an open letter published in The Scottish Sun newspaper on Saturday, Salmond said there was “absolutely nothing” that could be done to stop Scotland from using the pound and there was no alternative plan.

“Plan B implies settling for what’s second best,” he wrote.

“And neither myself, my colleagues in the SNP (Scottish National Party) or the wider Yes campaign will ever settle for second best for Scotland.”

Darling said using the pound without a formal union “would make it impossible for Scotland’s financial services industry to exist”, as the nation would be left without a central bank.

He added that political and economic convergence required for a currency union to work would likely be unpopular with many nationalists, who wish to make a break from the policies of the Conservative-led Westminster government.

“If I was a nationalist, why on earth would I want to move to a situation where my economic policy, the thing which they complain about most, is decided by what would then be a foreign country?” he said.

He added that the rest of the United Kingdom would be unlikely to tolerate the compromises needed to make a currency union work, such as the transfers of money to poorer areas, with a country that had just voted for separation.

Reporting by Alistair Smout; Editing by Crispian Balmer

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