Miliband admits currency threat will cost English businesses ‘hundreds of millions’

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  By Martin Kelly
 
Labour leader Ed Miliband has conceded that a refusal by a future Westminster Government to agree to a currency union with an independent Scotland will hit businesses south of the border.
 
Speaking to STV’s Bernard Ponsonby, Mr Miliband was pressed on the estimates of cross border transaction costs should no formal currency agreement be reached.

He said: “There are different estimates of that … the estimates are hundreds of millions.”

On Friday Mr Miliband visited Scotland in order to announce that his party was joining the Tories and the Lib Dems in pledging to block any currency agreement with a newly independent Scotland.  The leaders of all three London based parties had issued a joint statement insisting the threat would form part of their next manifesto for a Westminster election.

However the admission by the Labour leader that the policy will cost hundreds of millions has been seized on by the SNP with Finance Secretary John Swinney insisting no Westminster party leader will enter a general election pledging to increase costs to businesses in England.  Mr Swinnye also pointed out that the pound would suffer without Scotand’s vast contribution from sectors such as whisky and oil.

Mr Swinney said: “Under pressure, Ed Miliband has admitted that if he does not agree to a currency union then businesses in the rest of the UK would have to pay higher costs to do business with Scotland.

“Mr Miliband would have to say to the rest of the UK, – ‘look we are going to put a barrier up between Scotland for your trade, which would increase the cost of business in the rest of the UK by £500 million or more.’

“He’d also have to say ‘we’re going to undermine Sterling by rejecting the contribution made by oil and gas and whisky into a Sterling area’,”

The issue of currency has dominated media coverage of the referendum and follows a head-to-head on Tuesday between First Minister Alex Salmond and Better Together head Alistair Darling.  Mr Darling repeatedly asked Mr Salmond for a so-called Plan B.

However the Scottish Government has insisted that the pound is as much Scotland’s as the rest of the UK’s and highlighted the major contribution Scottish exports make to the UK balance of payments.

The Scottish Government has insisted that the pound and bank of England are assets that should be shared in the same way that the UK’s debts will be shared.

Mr Swinney added: “And he’d have to say ‘we’re also going to absolve the Scots of a £120 billion share of the UK debt, which translates into an annual cost of £5 billion a year simply because we won’t agree to a currency union.’

“This demonstrates how ridiculous the position of the No campaign is – and demonstrates exactly why there will be a currency union.

“The fact is, a currency union is in the interests of both Scotland and the rest of the UK – that is why the experts in the Fiscal Commission proposed it, and that is why we support it.

“It’s Scotland’s pound and we are keeping it.”

Meanwhile, First Minister Alex Salmond has warned the three unionist parties that their attempts to blackmail Scots into voting No through their joint threat over currency will rebound badly.

Writing in the Sunday Herald the First Minister said: “If the No campaign think that spending the rest of this campaign telling ordinary people in Scotland that they have zero entitlement to a currency that is already theirs … they will pay a heavy price.”

Mr Salmond insisted he would never accept second best for Scotland, and added: “Their obsession with a ‘Plan B’ says it all.  Implicit in that formulation is settling for what is second-best, and in this case what would be second-best for Scotland.

“Having spent my entire political career fighting for what I regard as being in the best interests of Scotland, I am not going to settle for second-best on currency or anything else.”

He hit back at the No campaign claims that Scotland had no right to the pound writing:

“I took the opportunity at Holyrood on Thursday to make one thing abundantly clear – it’s our pound and we are keeping it.

“There is literally nothing anyone can do to stop an independent Scotland using sterling, which is an internationally tradeable currency.”