Westminster parties bluffing over sterling threat, says Scottish National Party

The Scottish National Party has insisted that the UK’s biggest political parties are “bluffing” in their threat that Scotland will not be allowed to continue to use sterling if it votes for independence in September.

Chancellor of the exchequer George Osborne, who is leading the charge, said a currency union would not happen because it "would not be in the interests of either the people of Scotland or the remaining UK".

He continued: “The evidence shows it wouldn’t work. It would cost jobs and cost money and wouldn’t provide economic security for Scotland or for the rest of the UK.”

Rejecting the SNP’s claims that a deal would happen, he said “that is not going to happen”.

“I don’t think any other chancellor of the exchequer would come to a different view.”

In a rare show of Westminster unity, Labour's Ed Balls writes in the Scotsman today that Scottish first minister Alex Salmond says they "can leave the UK but keep the pound and the Bank of England. That is a false promise that he cannot deliver".

A currency union could not operate without the necessary degree of political union, he writes. “Having helped to keep the UK out of the euro I cannot import in to the UK the sort of problems which the euro zone has faced.

“I want Scotland to stay in the United Kingdom. But if Scotland were to vote to break away, then I do not believe a currency union would be in the interests of either an independent Scotland or the rest of the UK.”

Rejecting the arguments as "bluff", Scotland's deputy first minister Nicola Sturgeon said a deal would be done after a Yes vote in the September 18th referendum because there "are very good, sound, practical, common sense, hard-headed reasons" why it should be done.

The co-ordinated move led by Mr Osborne comes just a week after British prime minister David Cameron told Scots that the UK would be “diminished” without them.

Unusually, Mr Osborne published civil service advice given to him by head of treasury Nicholas Macpherson about the possible operation of a currency union. The advice was direct, even blunt. "Currency unions between sovereign states are fraught with difficulty. They require extraordinary commitment, and a genuine desire to see closer union between the peoples involved," he wrote.

The Scottish government’s proposals “against the background of a weakening union between the two countries” run counter to “the direction of travel” in the euro zone, since its members have been forced to deal with its problems.