Alex Salmond’s proposal to use the pound without the agreement of Westminster in an independent Scotland would lead to the new state being frozen out of the EU, according to a former European commissioner.
Olli Rehn, from Finland, said that the “sterlingisation” model would “simply not be possible” if Scotland wanted to be a member.
If so, it would leave the first minister with only two of his “three plan Bs” left — a new Scottish currency, either pegged to the pound or free-floating.
The main Westminster parties have already ruled out his first choice — a sterling union — and Mr Salmond has indicated that, if they stick to this, an independent Scotland would adopt the pound unilaterally.
However, Mr Rehn, who was European commissioner for economic and monetary affairs and the euro until this year, has written to the chief secretary to the Treasury to say that such a set-up would be incompatible with EU membership.
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Mr Rehn told Danny Alexander: “This would simply not be possible, since that would obviously imply a situation where the candidate country concerned would not have a monetary authority of its own and thus no necessary instruments of the Economic and Monetary Union.”
Mr Alexander said the letter showed that sterlingisation was “not only a bonkers idea which flies in the face of any reasonable notion of what independence means and which would impose costs and risks on people and businesses in Scotland, it is also incompatible with Scotland’s smooth re-entry into the EU”.
Speaking before the letter’s publication, Mr Salmond said: “We have heard a whole range of arguments about what is and what isn’t required in terms of EU membership and none of them have stood up to any examination.”