Salmond fights back after body-blows on EU membership and sterling

Pressure's on: Salmond faces war on two fronts
Pressure's on: Salmond faces war on two fronts
Ian Dunt By

Alex Salmond fought the independence war on two fronts today, as he hit back at George Osborne's rejection of a currency union and Jose Manuel Barroso's broadside on Scotland's EU membership.

The Scottish first minister used a speech to business leaders in Aberdeen to hit back at both opponents, who have dealt a potentially mortal blow to the feasibility of the arguments for an independent Scotland in recent days.

"The reality is the pound is as much Scotland's as the rest of the UK," Salmond said.

"By suggesting otherwise, the Westminster establishment – Tories, Labour and Lib Dems – are reaping a backlash from the ordinary people of Scotland, who feel this is an attempt to bully Scotland ahead of the democratic choice we all look forward to this September.

"I will be deconstructing the chancellor's ill-thought-out and misinformed intervention point by point, making clear why a currency union not only favours Scotland but is in the clear economic interests of the UK as well."

Osborne said he decided against currency union with an independent Scotland after seeing analysis from the Treasury and other leading civil servants.

Most SNP figures believe he is bluffing and that Westminster would be more compliant to requests for currency union after an independence vote.

But Conservative sources suggest Osborne is genuinely convinced of his position and does not want the fate of Britain's finances to be reliant on an independent state with a large economy pursuing a looser spending pattern.

"The chancellor will have to explain exactly why he favours imposing almost £500 million worth of higher transaction costs on UK businesses instead of entering a perfectly feasible sterling area with the rest of the UK's second biggest trading partner," Salmond said.

The first minister will use the speech to again threaten that Scotland would not pay its share of UK debt if Westminster did not play ball on currency union.

This repeated threat has more weight now that the Treasury has confirmed it would be legally liable for all debt issued by the UK government up to independence.

But there is serious doubt that Salmond would see it through, given the cost to the Scottish economy.

Figures in the Better Together campaign say international investors would severely punish a small, new country whose first financial act was to refuse to pay its debts.

"The Scottish government has welcomed the recent acknowledgement by the Treasury that it will remain legally liable for all debt issued by the UK government up to the point of independence, and we will continue to take the fair and reasonable position that an independent Scotland should finance a fair share of that," Salmond said.

"However, the chancellor will have to wake up to the fact that he cannot lay claim to assets to which Scotland has a share – such as the Bank of England and the pound – and still expect an independent Scotland to meet a share of UK liabilities."

He added: "These are just two examples of undemocratic and self-defeating positions being put forward by a Westminster establishment that continues to say whatever campaign rhetoric suits their cause before the referendum and highlights why they will smartly change their tune after it."

But as Salmond was fighting Osborne's currency gambit, he was also facing a second front on the question of Scottish membership of the EU, after European Commission president Jose Manuel Barroso said it would be "extremely difficult if not impossible" for an independent Scotland to join the EU.

Such a move would require an independent Scotland to apply for membership as a new country and get the approval of all member states.

That would be a long, drawn-out process, during which Scots would potentially lose rights to free movement and access to the single market.

Barroso suggested countries like Spain, which is concerned about Catalan separatists, would veto Scottish membership in the same way that it opposes Kosovo's entrance.

The Barroso intervention is particularly wounding for the SNP, which has long been a resolutely pro-European party.

"The EU is in the business of taking down borders between countries, it's hardly going to seek to keep Scotland out," deputy Scottish first minister Nicola Sturgeon said on the Today programme this morning.

"What he is saying is that other member states would not want Scotland to have membership, but I take issue with that.

"No member state has said they would seek to veto Scotland - not even Spain. It would be enormously disruptive, not just for Scotland but all of the EU, for Scotland to be outside the EU."

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