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Scotland’s financial services industry would be put at “significant risk” by the creation of a border with the rest of the UK, a committee of MPs said on Monday.
The conclusion came in a report that infuriated Scottish nationalists by describing the idea of a currency union between the UK and an independent Scotland as a “dead parrot”.
The Scottish affairs select committee said it was convinced that no present or future government could enter a currency union without destroying their political and economic credibility.
The possibility of independence had already created uncertainty in the financial services sector, with significant companies drawing up plans to relocate their headquarters, hitting the Scottish economy, the report found.
If companies instead decided to stay in Scotland it would leave the country with an “exceptionally large” financial industry, which would threaten financial stability, the MPs said. “The Scottish government’s existing proposals for financial services regulation, and for safeguarding the customers of the financial services industry, are unsatisfactory,” they said.
In March, an anonymous coalition minister was quoted by a Scottish newspaper saying that “of course” Scotland would have a formal currency union, perhaps in return for allowing the Trident nuclear deterrent to remain at Faslane.
But Ian Davidson, the Labour chair of the committee, said there would definitely be no union: “No ifs, no buts, no fudges, no deals.” That had been firmly stated by the leadership of the UK’s three main political parties.
“There is no shadow of doubt. All were unequivocal,” he said. “The Scottish government tries to give the impression that a currency union is still a possibility. It is not. This parrot is dead.”
George Osborne, the chancellor, has said that Scottish banks would be stopped from printing sterling banknotes and Scots would need to hold on to pounds that crossed the border if the country continued to use sterling after declaring independence.
The SNP wants to share the pound with the UK, keeping the Bank of England, and has repeatedly argued that if Scotland votes for independence in the September referendum it would be possible to reach an agreement.
But the committee report said voters needed to know what the alternative would be if there was no currency union.
It suggested that Scotland could have to use the pound without the UK’s permission in a system called “sterlingisation”. Under that system the newly independent country would not be able to use the Bank of England as its central bank.
“While sterlingisation is therefore not a credible option, it appears to be the Scottish government’s current ‘plan B’,” the committee report added.
A spokesman for Alex Salmond, first minister in Holyrood, dismissed the findings of the report.
“The pound is as much Scotland’s as it is England, Wales and Northern Ireland’s,” he said. “The fact a group of anti-independence Westminster MPs feel the need to issue a lame report like this shows just how vulnerable the No campaign has become on this issue.”
The committee said that Scotland could theoretically join the euro if it swiftly obtained membership of the European Union.
However, a standalone Scottish currency would give a Scottish government the greatest economic freedom to shape policy after a Yes vote, the MPs found.
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