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SNP told retaining pound may be a pipedream

A senior member of the UK Government has warned Scottish nationalists it would be "extremely challenging" to have a stable currency union in a "divided UK".

Alex Salmond's Government has set out plans to retain the pound as Scotland's currency if the country votes for independence in next year's referendum, in what the First Minister has described as a "sterling zone" with the rest of the UK.

However, Chief Secretary to the Treasury Danny Alexander cautioned against such a policy.

"It is extremely challenging to combine monetary union with full fiscal independence," he said.

Mr Alexander said the Scottish Government must prove the benefits to Scotland and the rest of the UK of having a monetary union without a political union.

In a speech in Stirling he said the "lessons learned from the eurozone" highlighted the difficulties that could arise.

Economics experts in the Fiscal Commission Working Group, set up by Scottish First Minister Alex Salmond, have already concluded keeping sterling as the currency in an independent Scotland was "sensible".

But Mr Alexander said: "The lessons learned from the eurozone have been clear for all to see." His speech came ahead of the launch of a policy paper from the UK Government on currency and financial stability for Scotland.The way in which North Sea oil revenues would be divided if there was a Yes vote in next September's referendum is "clearly be a matter for negotiation", he said.

Scottish Deputy First Minister Nicola Sturgeon defended plans for an independent Scotland to retain sterling, describing the pound as "every bit as much Scotland's currency" as the rest of the UK's.

Belfast Telegraph