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Alex Salmond fights back over sterling and EU

By James Cusick

The war of words between Westminster and Alex Salmond's Scottish Government over whether an independent Scotland could use the pound has escalated as the Scottish First Minister defended his plans for a currency union.

Mr Salmond has mounted a joint salvage operation to try to rescue two key planks of the Scottish independence campaign.

Following sustained attacks by London and Brussels on the nationalists' assurances that Scotland would retain the pound and be granted continuing EU membership, the First Minister said the "ill-informed" comments made by George Osborne in Edinburgh last week had "backfired".

Mr Salmond told pro-independence business leaders in Aberdeen it would be impossible for the Treasury to sell a "George tax" that would add £500m a year to English businesses in transaction costs with Scotland.

Mr Osborne in turn claimed Mr Salmond "now is a man without a plan" after the Conservatives, Labour and Liberal Democrats rejected a currency union with an independent Scotland. The stark questions now hanging over an independent Scotland's currency and whether it would be left stuck in a long queue for EU membership are seen by the 'Yes' campaign as potentially damaging issues that cannot be allowed to drift between now and the September 18 referendum.

Mr Salmond described the attacks by Westminster and Brussels as "attempts to dictate from on high" what Scotland can and cannot do.

He said the Chancellor had not offered an economic assessment of Scotland forming a currency union with England, but had instead indulged simply in a "campaign tactic". He forecast this would "differ greatly from the reality of life" once the referendum votes were counted.

He repeated that if Scotland was denied a share of the pound and the Bank of England, there would be no legal obligation for it accepting a share of the UK's £1.25 trillion debt.

The leader of the 'No' campaign, Alistair Darling, accused Mr Salmond of "pretending the last week (of attacks) never happened".

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European Commission president Jose Manuel Barroso has said it would be "extremely difficult, if not impossible" for an independent Scotland to get the necessary approval from the existing member states for it to join the European Union. And the Tories, Labour and Liberal Democrat have all dismissed the idea of a currency union between Scotland and the rest of the UK.

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