Chancellor to rule out currency union

<p>Scotland will have to give up the pound if it declares independence.</p>

Chancellor George Osborne is expected to rule out a currency union with Scotland in the event of the country voting for independence later in the year.

The referendum is set to take place on September 18th, but the Yes campaign has previously argued it would continue to use the pound if Scotland breaks away from the rest of the UK.

But deputy first minister Nicola Sturgeon has criticised the Treasury's move and labelled it an attempt to "bully Scotland" ahead of the vote, with the Conservatives and the Labour Party both keen for Scotland to stay in the union.

Ms Sturgeon told BBC Radio's Good Morning Scotland programme that the government has gone from prime minister David Cameron's "love bombing" back to "bullying and intimidation" in the space of just a week.

"It is a bluff, because if this was to be the position of the Westminster government then it would put them in a position that's at odds with majority public opinion in Scotland, it would put them at odds with majority public opinion in England," she said.

Cost to businesses

Ms Sturgeon added that not allowing Scotland to continue to use the pound in the event of the country declaring independence would cost businesses in England hundreds of millions of pounds. She said: "It would blow a massive hole in their balance of payments and it would leave them having to pick up the entirety of UK debt."

The Scottish National Party has long campaigned for an in-out referendum on Scotland's position in the union. Advance surveys indicate that Scotland will choose to remain in the union rather than declare independence when it goes to the polls, but the result is expected to be a close one.

According to BBC political correspondent Tim Reid, Scottish ministers will be under a great amount of pressure if they are blocked from using the currency if Scotland becomes independent following the result of the referendum.

Learn about the sterling and forex trading at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.