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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


Scottish Budget update

The Finance secretary has announced a draft budget for 2013 / 2014. John Swinney has said the actions the Scottish Government will take this autumn will provide further investment in construction, skills and the green economy.

John Swinney pledged £180m over two years for construction, skills and employment and a green economic stimulus.

He confirmed a more rapid delivery of the Schools for the Future programme worth £80m and an initiative to create up to 10,000 job opportunities for young Scots.

The Budget keeps the Government's commitments to a council tax freeze, police numbers, no tuition fees, free prescriptions, concessionary travel, and NHS budget protection.

He confirmed a 1% increase for most Government and NHS employees, more support for the low paid and no compulsory redundancies.

"Today I am announcing a Scottish budget for jobs and growth. In difficult economic times this Government is doing everything within its limited power to stimulate Scotland's economy, to invest in our young people, protect households, and support front line services.

"To support the construction industry and inject growth into the economy we will provide an immediate stimulus to the construction industry of £40 million through investment in affordable housing.

"I am also determined to ensure our young people get the best education in the best possible schools. So to further assist the construction sector we will increase the number of schools being built from 55 to 67 bringing forward £80 million investment through NPD.

"A Green Investment Package of £30m over the next three years will help home owners improve energy efficiency, cutting bills and tackling fuel poverty whilst along with investment in low carbon transport supporting our growth industries and helping to meet our climate change targets."

– John Swinney
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