Secretary Osborne: Scottish economy could remain within UK domain

UK Chancellor, Finance Secretary, George Osborne has insisted there was still an economic case for Scotland to stay within the United Kingdom. Osborne entered the independence debate during a visit to Glasgow, Scotland, where he gave a speech to business leaders at the annual Confederation of British Industry (CBI) Scotland dinner last night. He said there is more to Unionism than "wallowing in nostalgia." Setting out his case for a No vote in late 2014, he accused Scotland's First Minister Alex Salmond of failing to provide a credible answer to his plan for a shared sterling currency union. "Today the advocates of independence argue that Britain's value to Scotland is spent, that union is no longer in Scotland's economic interests and that those who continue to believe in Britain are wallowing in nostalgia," said Osborne. "I want to take this argument head-on. I make no apology for sharing all of the instinctive emotional attachment to Scotland's place within the UK. "Our shared history and culture, distinct yet intertwined identities, a whole greater than the sum of its individual parts. And I reject the idea that while Britain has a glorious history, it has little relevance in tackling the challenges and grasping the opportunities of the modern world." The existing single currency union in the UK has supported three centuries of economic and social integration, he said, adding that the trouble in the eurozone is a warning of what can happen with a currency union without political union. "That's why the eurozone are developing plans to control the fiscal positions of individual member states so that they can avoid the risks of contagion for all members of the union," he said. "Greater political integration, because sharing a currency and perhaps a central bank means policies that are consistent not divergent. "Members must be prepared to forgo individual interests and circumstances for the interests of the union as a whole. "So it's difficult to argue for establishing a monetary union while pursuing fiscal and political separation. "In a world in which a separate, independent Scotland wished to pursue divergent economic policies, what mechanism could there be for the Bank of England to set monetary policy, as it does now, to suit conditions in both Scotland and the rest of the UK?" As Chancellor of the Exchequer, I have seen no such credible mechanisms proposed by those advocating independence. I am not clear they exist," he said. "If the Scottish Government cannot provide answers to these basic questions about Scotland's currency, then the Scottish people are entitled to ask this basic question in return: what path is the Scottish Government leading them down?" The comment echoes concerns raised by former Labour chancellor Alistair Darling who heads the pro-Union Better Together campaign. On the wider UK economy, Osborne said there is no easy path to take. "We in Britain have to confront our problems head-on, be honest about the scale of the challenge and be consistent in our determination to succeed," he said. A spokesman for Scottish Finance Secretary John Swinney said: "Scotland needs no lessons from a Conservative Chancellor whose disastrous economic policies are threatening jobs and investment across this country. And it simply beggars belief that Osborne can claim the economy is healing on the same day that the OECD has downgraded its forecasts and predicts the UK economy will shrink by 0.7% this year. Osborne has insisted there were "positive signs" in the UK economy despite a think-tank drastically downgrading its growth forecast for Britain. The Organisation for Economic Co-operation and Development (OECD) predicted a 0.7% fall this year, having previously expected a rise of 0.5%, and said the country will fail to pull out of its double-dip recession in the current quarter. Despite the gloomy forecast, the Chancellor maintained that the economy was healing and insisted the Government will not change course on its economic programme in the face of the opposition Labour demands for action to stimulate growth. His comments came last night after the European Central Bank (ECB) unveiled details of a new bond-buying plan aimed at easing the eurozone's debt crisis. Osborne told the business organisation, the CBI Scotland dinner in Glasgow: "The economic outlook remains uncertain but there are some positive signs. "Our economy is healing - jobs are being created, manufacturing and exports have grown as a share of our economy, our trade with the emerging world is soaring, inflation is down, much of the necessary deleveraging in our banking system has been achieved, and the world is once again investing in Britain." The senior Conservative said that nobody was offering "a credible or convincing alternative economic strategy." He added: "We in Britain have to confront our problems head on, be honest about the scale of the challenge, and be consistent in our determination to succeed." Osborne's address came after positive manufacturing and services surveys revealed tentative signs of a recovery, analysts said. It also followed news that the ECB is to buy up government bonds of eurozone countries to help bring down their borrowing rates. The move represents the clearest sign yet that ECB president Mario Draghi is willing to live up to his pledge to do "whatever it takes" to save the single currency.