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Full Report: Chancellor warns Scotland could lose the pound

An independent Scotland could lose the pound - that was the warning from the Chancellor George Osborne as he launched a new treasury report today.

The Scottish Government says it wants to create a currency union with the rest of the UK if Scots vote 'yes' in the referendum next year.

However, Mr Osbourne cast doubt on the idea that a deal could be struck and warned Scotland could be heading into 'unchartered waters.'

Kathryn Samson reports:

Currency paper "shows we are better together" says Borders MP

Borders MP Michael Moore has said that the currency paper published by the UK Government today "clearly shows that we are better together".

“The currency paper published today clearly shows that the current system is the best for Scotland and the rest of the UK when compared with the other options.

“The crisis in the eurozone, has shown that a formal sterlingzone, as proposed by the SNP, would be extremely challenging to sustain without close fiscal integration.

"Such an arrangement seems to defeat the purpose of independence and would rob Scotland of control over its currency and important financial levers.

“In contrast, the current system has brought economic benefits to all parts of the UK because taxation, spending, monetary policy and financial stability policy are co-ordinated across the whole of the UK.

"This means that economies of Scotland, Wales, England and Northern Ireland are all taken into account when policy decisions are made. This would no longer be the case for Scotland if we were to break away from the UK.

– Michael Moore MP, Berwickshire, Roxburgh and Selkirk, Lib Dems

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Salmond accuses Chancellor of 'political sabre-rattling'

Scottish First Minister Alex Salmond, speaking to BBC News 24, accused the Chancellor of "political sabre-rattling".

This is a Tory Chancellor trying to scare people in Scotland, trying to stop them voting for independence.

But the day after a resounding Yes vote in the referendum, when people sit down and start to negotiate in the best interest of the people of Scotland and the rest of the United Kingdom, he will sing an entirely different tune."

It's in everyone's interests to have a currency area after independence - it's in the interests of Scotland, it's also overwhelmingly in the interest of the rest of the United Kingdom.

– Alex Salmond, Scottish First Minister

He said that was for the "very simple reason that huge Scottish resources such as oil and gas would continue to protect the sterling balance of payments"

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Only way to keep pound in Scotland is to 'stay in the UK'

Speaking in Glasgow the Chancellor has said:

The SNP asserts that it would be in everyone's interests for an independent Scotland to keep the pound as part of a eurozone-style sterling zone.

But the Treasury analysis we are publishing today shows that is not the case. Let's stop speculating and look at the evidence.

Would the rest of the UK family agree to take that risk? Could a situation where an independent Scotland and the rest of the UK share the pound and the bank of England be made to work? Frankly it's unlikely because there is real doubt to the answers of these questions.

In other words the only way to be sure of keeping the pound as Scotland's currency is to stay in the United Kingdom.

– George Osborne, Chancellor

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