Wednesday

23rd May 2018

Choose between pound or EU membership, Rehn tells Scots

  • Former eurozone commissioner Olli Rehn has entered into the Scottish independence debate (Photo: consilium.europa.eu)

An independent Scotland would have to choose between using the pound and joining the EU, the bloc's former economic affairs commissioner has said.

In a letter to the UK's treasury minister Danny Alexander released on Tuesday night (2 September), two weeks before Scotland's four million voters decide whether to leave the UK, Olli Rehn stated that the Scottish government's plan to keep sterling without a formal currency union with London would be incompatible with EU membership.

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"As to the question of whether 'sterlingisation' were compatible with EU membership, the answer is that this simply would not be possible, since that would obviously imply a situation where the candidate country concerned would not have a monetary authority of its one, and thus no necessary instruments for EMU," he wrote.

The question of whether Scotland could continue to use the British pound as its currency has been one of the key arguments during the campaign.

Nationalist leader Alex Salmond has insisted that Scotland would not seek to join the eurozone and would keep the pound with or without the consent of Westminster.

Keeping the pound would also mean that Scotland would remain subject to the Bank of England's decisions on interest rates and monetary policy.

Both the governing Conservative party and the opposition Labour party have said that they would not allow an independent Scotland to use sterling.

Meanwhile, Rehn also added that Scotland would not be able to walk away from its responsibility for part of the UK's national debt if London refused to allow it to have a currency union.

Olli Rehn served two terms in the EU executive, firstly as enlargement commissioner followed by four years as the bloc's economic affairs chief. In May he was elected as an MEP for the Finnish Centre party which sits with the Liberal MEP group.

His intervention will be a blow to the Scottish Nationalist cause after a poll released earlier this week indicated that the independence campaign is gaining support ahead of the 18 September vote.

Although a majority of Scots are still set to support remaining in the UK, their lead has narrowed to six percent with 47 percent now backing independence.

Last week, Salmond was widely perceived to have won the second televised debate with Labour politician Alistair Darling, the leader of the pro-Union Better Together campaign.

In a speech on Wednesday, Danny Alexander, himself a Scottish Liberal MP, will compare Scotland to Panama, which uses the US dollar, and claim that Salmond's currency plan is a "bonkers idea" that would "impose costs and risks on people and businesses in Scotland".

"No country has ever joined the EU using only the currency of another country at the point of accession".

For his part, Salmond responded to Rehn's letter, commenting that "we believe there will be a common sense agreement on a common currency" if Scots voted for independence.

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