Scottish independence: Chancellor George Osborne denies currency deal claim

Chancellor George Osborne and Treasury Secretary Danny Alexander have insisted it is "wrong" to suggest there would be a currency union between the UK and an independent Scotland.

A Guardian report quotes an unnamed minister who says a deal could be done to allow Scotland to use the pound.

But Mr Osborne and Mr Alexander said "there will not be a currency union".

Scotland's Deputy First Minister Nicola Sturgeon said the No Campaign was "deeply damaged".

The Guardian quotes a UK government minister who it says would play a central role in the negotiations over the break-up of the UK if there were a yes vote.

It quotes the unnamed minister as saying: "There would be a highly-complex set of negotiations after a yes vote with many moving pieces.

"The UK wants to keep Trident nuclear weapons at Faslane and the Scottish government wants a currency union - you can see the outlines of a deal."

The Treasury, along with Shadow Chancellor Ed Balls, has previously ruled out a currency union.

In a joint statement, George Osborne and Danny Alexander said: "There will not be a currency union in the event of independence. The only way to keep the UK pound is to stay in the UK. Walking out of the UK means walking out of the UK pound.

"A currency union will not work because it would not be in Scotland's interests and would not be in the UK's interests.

"Scotland would have no control over mortgage rates, and would be binding its hands on tax and funding for vital public services."

The statement added: "The Scottish government are proposing to divorce the rest of the UK but want to keep the joint bank account and credit card.

"The UK would not put its taxpayers at risk of bailing out a foreign country and its banks. Parliament wouldn't pass it, and the people wouldn't accept it.

"Any suggestion to the contrary is wrong."

Scottish Secretary Alistair Carmichael said: "An anonymous, off-the-record quote does not change the stark reality on the currency."

Nicholas Watt, the Guardian journalist who wrote the story, spoke to BBC Radio Scotland's Good Morning Scotland programme.

He said: "Their [UK government's] absolute trump card in this campaign is to say there will be no currency union and they will be saying that from now until midnight on the 17th September.

"But in the unlikely event of a Yes vote, in a very lengthy negotiation, you may well find that a trump card in a campaign will come quite different in these negotiations."

Last month, the Chancellor said a vote for Scottish independence would mean walking away from the pound.

Scottish First Minister Alex Salmond accused him of "bluff and bluster".

The Scottish government, led by Mr Salmond's SNP, has argued that keeping the pound and the services of the Bank of England as part of a currency union under independence made sense for both Scotland and the rest of the UK.

But Mr Osborne's declaration that there would not be a currency union was followed by Mr Alexander and Labour's Ed Balls insisting that they would not agree to share sterling if Scotland voted for independence in September.

Danny Alexander and George Osborne issued a statement saying there would be no currency union

Scotland's currency after independence has become a major issue in the campaign

Deputy First Minister Nicola Sturgeon said the UK government's approach was backfiring

Scotland's Deputy First Minister Nicola Sturgeon said: "For all George Osborne and Danny Alexander's frantic denials, by definition this is a story which is impossible to deny - because the story is specifically that everything the UK government and the No campaign are saying on this issue ahead of the referendum is a campaign tactic.

"The revelation from a Treasury source that everything it has been saying on a currency union has been dictated by Alistair Darling is an extraordinary one, and is deeply damaging to the credibility of the Treasury on this issue.

"What has been exposed is the deep cynicism and negativity at the heart of the No campaign - a campaign which is clearly badly rattled by narrowing polls and which will never be able to mount a truly positive campaign, because negativity is in its DNA."

Voters in Scotland will be asked the Yes/No question: "Should Scotland be an independent country?" when the independence referendum is held on 18 September.