Alex Salmond must now reveal what currency an independent Scotland would have as a deal to share the pound with UK “is not going to happen”, shadow Chancellor Ed Balls has said.
Mr Balls said he will not support a currency union if Scotland votes yes in the independence referendum and he became UK chancellor in 2015.
In an article for The Scotsman newspaper, Mr Balls said: “As Chancellor in a UK Labour government after the general election, I simply could not support or recommend to Parliament that we form a currency union with a separate Scotland.
“Looking at the economics of this, it’s the only conclusion I can reach. A currency union between an independent Scotland and the rest of the UK is not going to happen.
“So I hope the Scottish people vote to stay part of the UK. But if Scotland votes to break away they will be voting to leave both the fiscal and currency union that we now have – and which has worked to the benefit of all.
“Alex Salmond must now come clean and explain to the Scottish people what currency an independent Scotland would have.
“It is the most fundamental economic question a country has to decide. The troubled experience of the euro over the last decade shows why it’s so vital to get this right.”
He added: “A euro-style monetary union between an independent Scotland and the rest of the UK would mean Scotland would have to live with an economic policy not suited to Scotland, with a direct impact on Scottish jobs and growth.
“It would involve simply unacceptable fiscal and economic risks for the rest of the UK. And interest rates would be higher in the UK and Scotland as a result.
“All this analysis tells us that a currency union between the UK and a separate Scotland cannot work, will be unstable and bad for both a separate Scotland and the rest of the UK.
“And having helped to keep the UK out of the euro, I cannot import in to the UK the sort of problems which the eurozone has faced.”