Osborne 'not serious' on blocking currency union

Chancellor George Osborne is not being ­serious in his rejection of a formal currency union with an independent Scotland, according to the head of the Scottish Government's fiscal advice group.

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Economics will trump ­politics after a Yes vote in the independence referendum, Crawford Beveridge told Holyrood's Economy Committee.

His fiscal commission working group recommended last year that a sterling monetary union was the best currency option for Scotland and the rest of the United Kingdom.

However, Mr Osborne, backed by Labour and Liberal Democrat leaders, ruled out the proposal during a visit to Edinburgh last month.

First Minister Alex Salmond has refused to ­entertain a plan B, such as a new currency.

Mr Beveridge reaffirmed his group's position, saying the rest of the UK would face ­issues such as transaction costs for firms if no agreement was reached. The Treasury's ­acknowledgement of legal ­responsibility for the UK's debt would also be a factor, he told MSPs.

Mr Beveridge said: "I don't think any of us on the committee believe for a minute that the Chancellor is serious.

"We warned in our report last year that leading up to this there was going to be a lot of political statements, but in our opinion economics will trump the politics on this, and good heads will prevail if there happens to be a Yes vote.

"We would not want to even talk about a plan B at this stage of the game."

He added: "I think we would say there are lots of options, but our strong advice would be to go down the path of recommending to the Government that they stick with the monetary union.

"We will spend some time trying to help the rest of the UK understand the very strong advantages there are to that, and the very strong disadvantages there would be to go against that."

Mr Beveridge also told MSPs advice to Mr Osborne from the Treasury's Permanent Secretary, Sir Nicholas Macpherson, gave wiggle room as it stated he would advise against theplan "as currently advocated".

The Edinburgh Agreement, signed by the First Minister and the Prime Minister, also suggests constructive negotiations would take place in the event of a Yes vote, he said.

Mr Beveridge added: "I just cannot believe that, just out of sheer spite, someone would say they are not going to enter into an agreement along those lines."

But Dr Angus Armstrong, of the National Institute of Economic and Social Research, said the Chancellor's position is "entirely rational".

He said Scotland should start its own currency instead of trying to forge a formal agreement to share sterling.

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