We can conclude George Osborne is bluffing. It's a campaign tactic

YESTERDAY the Cabinets of both the Scottish and UK governments met in Aberdeen.

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For the Scottish Government, the practice of having meetings in different parts of the country is well established, but for the UK government it is a much rarer event.

However, I suspect that between now and the referendum, we will become used to UK Tory politicians heading north - to occasionally love-bomb us, but more often try to scare us about the consequences, as they see it, of voting yes.

On the evidence of the last couple of weeks, though, it's a strategy that isn't going to be successful.

Since George Osborne visited Edinburgh a fortnight ago to tell us we wouldn't be able to keep our own money if we voted yes, polls have shown an increase in support for independence.

In my view, there are some simple reasons for that.

Firstly, people in Scotland don't take too kindly to being lectured by a Tory Chancellor.

Secondly, the pound belongs to Scotland just as much as it does to the rest of the UK. And despite its name, the Bank of England -nationalised in 1946 - is a joint asset.

It was even founded by a Scot. So the suggestion that Westminster can simply take away the pound if we choose to be independent offends our sense of fairness and democracy.

It is also worth pointing out that it is impossible for them to do so as the pound is a fully tradeable currency - no-one can be prevented from using it if they so choose.

But the real reason that I think George Osborne's intervention has backfired is that the Scottish Government's proposal - to use the pound within a formal sterling zone - makes sense for both Scotland and the rest of the UK.

English businesses would face massive transaction costs if Scotland, their second biggest export market, used a different currency.

Also, using the pound as part of a sterling zone means that the value of Scotland's oil and gas exports - worth £30 billion a year - will still count towards the UK's balance of payments. If we are not in a sterling zone, that won't happen and the UK's trade deficit will increase with an impact on the value of sterling.

And lastly, while the Scottish Government thinks it right that we pay a fair share of UK debt if Scotland becomes independent, it stands to reason we would only do so if we also have a share of assets.

THE UK's debt belongs legally to Westminster so Scotland, by definition, can't default on it.

And if Westminster had to accept all debt, the extra interest payments it would have to pay would be equivalent to increasing the basic rate of income tax in the rest of the UK by 1p.

So, for all of these reasons we can conclude that George Osborne is bluffing. It is a campaign tactic.

When the vote is over, we will share the pound and share the debt - because it is in our joint interests to do so. That is the reality.

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