By a Newsnet reporter
Claims that a currency union are set to be explicitly ruled out by UK Chancellor George Osborne tomorrow have become mired in confusion after it emerged the Chancellor will in fact be responding to a UK Treasury paper which will lay out tests and conditions his own officials claim are required for such an agreement to operate.
Initial reports from BBC Scotland yesterday insisted Mr Osborne would explicitly rule out a currency union between an independent Scotland and the rest of the UK.
Yesterday BBC Scotland’s Westminster correspondent Tim Reid announced he had been briefed by sources close to George Osborne who had, he claimed, told him that the Chancellor would explicitly rule out a currency union with an independent Scotland.
However it has now emerged that the Chancellor will not in fact reject a currency agreement but will instead reject a set of tests drawn up by officials from his own Treasury department.
According to the BBC’s UK political editor Nick Robinson, a Treasury review to be published tomorrow will state the three conditions department officials will say are needed for a successful currency union between an independent Scotland and the rest of the UK are.
They will be:
- Underwrite each others banks
- Allow taxpayers in one country to subsidise the other
- Reach broad agreements on tax, spending and borrowing levels on both sides of the border
It is then expected that George Osborne will say that such conditions would be “unacceptable”, for the UK and Scotland. Mr Osborne is also expected to be joined in his rejection of the UK Treasury conditions by his Labour party counterpart Ed Balls and Lib Dem coalition partner Danny Alexander.
The apparent watering down of Mr Osborne’s ‘threat’ has been seized on by the Scottish Government who have claimed the original briefing given to BBC Scotland is now “unravelling”.
Commenting on the latest reports, Deputy First Minister Nicola Sturgeon said the threat to bully Scots will “backfire spectacularly”.
She added: “But the reality is the Tory Chancellor and his Labour and Lib Dem helpers are all over the place, with their briefing fast unravelling.
“First we were told George Osborne was going to rule out a currency union, but now it is being reported that he will outline a Treasury paper with a series of tests and conditions which would be their starting point in negotiations to secure a Sterling area.
“That is a very long way from what was initially briefed, and simply underlines the fact that the Treasury themselves know – whatever the bluff and bluster of Westminster politicians – that a shared Sterling area is overwhelmingly in the rest of the UK’s economic interests following a Yes vote.”
If the new reports are true then it will prompt questions as to the manner of BBC Scotland’s initial reporting after the broadcaster’s news reporters spent Tuesday evening and all of Wednesday insisting that Mr Osborne would explicitly rule out a formal currency union.
The news has dominated BBC Scotland news output, with several of its presenters and reporters demanding the Scottish Government bow to demands from the No campaign for a so-called currency plan B. On Wednesday morning on Radio Scotland, Deputy First Minister Nicola Sturgeon responded to repeated questions from interviewer Gary Robertson by suggesting the presenter apply the same scrutiny to the apparent threats emanating from Westminster.
The BBC’s reports have also found their way into print media and other news outlets with resulting attacks on the Yes campaign and Scottish Government.