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Miliband: I won't let Scotland keep pound: Labour will seek mandate to veto Salmond plan Threat to default on share of UK debt 'extraordinary'

August 9, 2014

Severin Carrell Scotland correspondent



The conflict over Scotland's currency options after independence has intensified further after Ed Miliband said Labour's next manifesto would promise to veto Alex Salmond's plans to share the pound.

The Labour leader said he would seek a formal mandate from other voters in the UK to reject a deal to share sterling, by putting that veto in the 2015 general election manifesto if there was a yes vote in September's referendum.

His intervention yesterday came after Salmond insisted he would fight for a deal on sterling if he won on 18 September, arguing in Holyrood that a yes vote would give his government a "sovereign mandate" from the Scottish people.

"It's our pound and we're going to keep it," he told MSPs on Thursday, renewing his threat to renounce Scotland's share of the UK debt if Westminster vetoed a deal to share sterling.

Miliband, speaking after he addressed Scottish business leaders in Glasgow, said he saw no case for recommending a euro-style currency union and accused Salmond of wrecking his own case by threatening to default on Scotland's share of the UK's debt, likely to total pounds 1.6tn by 2016.

Asked if that sterling zone veto would be written into Labour's election manifesto if Scotland voted for independence, he said: "Yes. I'm ruling it out now, yes."

The Labour leader, who has yet to build up a commanding lead in UK opinion polls, said it was "totally extraordinary" that both Salmond and John Swinney, Scotland's finance secretary, were raising the debt default threat given how so many Scottish voters felt worried about the risks of independence. "I can't see that will do anything more than make people feel deeply insecure and deeply worried about the prospects for an independent Scotland," Miliband said.

UK party leaders have now all endorsed a decision by George Osborne, the chancellor, and the Treasury in February to veto a deal on sterling, arguing that it would require UK taxpayers and the Bank of England to underwrite Scottish banks and Scottish government budgets.

Under a blueprint spelt out by Mark Carney, the Bank of England governor, it would also require the Scottish government to pool parts of its budgets and accept strict controls on spending and borrowing. It would also cede control over interest rates and monetary policy to the UK.

Backed up by some economists and business leaders, Salmond insists a currency union would be in the UK's interests because of the high level of cross-border trade, the need for a closely integrated financial regulatory system to protect the UK's banks, and the high level of economic integration within the UK.

That was emphasised by Swinney, who told BBC Radio Scotland yesterday that rejecting a sterling union would greatly increase business costs for UK firms operating in Scotland, and leave the UK Treasury paying off Scotland's share of UK debt.

"They cannot turn round to the electorate in the rest of the UK and say we are going to let the Scots go away debt-free from the United Kingdom, we are going to let them off from an annual cost of pounds 5bn," Swinney told Good Morning Scotland.

Captions:

'Would you like a picture?' Ed Miliband asks passersby at the Thistles shopping centre in Stirling yesterday Photographs: Murdo MacLeod for the Guardian


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Source: Guardian (UK)


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